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Policy Contribution

It’s not just Russia: Currency crisis in the Commonwealth of independent states

This Policy Contribution analyses the dynamics of currency crises in Russia and Ukraine and their regional contagion, with attention to changes in nominal exchange rates, international reserves and official reactions to the development of crisis.

By: Date: February 9, 2015 Topic: European Macroeconomics & Governance

 Highlights

• The currency crisis that started in Russia and Ukraine during 2014 has spread to neighbouring countries in the Commonwealth of Independent States (CIS). The collapse of the Russian ruble, expected recession in Russia, the stronger US dollar and lower commodity prices have negatively affected the entire region, with the consequence that the European Union’s entire eastern neighbourhood faces serious economic, social and political challenges because of weaker currencies, higher inflation, decreasing export revenues and labour remittances, net capital outflows and stagnating or declining GDP.

• The crisis requires a proper policy response from CIS governments, the International Monetary Fund and the EU. The Russian-Ukrainian conflict in Donbass requires rapid resolution, as the first step to return Russia to the mainstream of global economic and political cooperation. Beyond that, both Russia and Ukraine need deep structural and institutional reforms. The EU should deepen economic ties with those CIS countries that are interested in a closer relationship with Europe. The IMF should provide additional assistance to those CIS countries that have become victims of a new regional contagion, while preparing for the possibility of more emerging-market crises arising from slower growth, the stronger dollar and lower commodity prices.

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Policy Contribution

PC 13 2017 cover

Central Asia at 25

After a decade of growth based on hydrocarbon booms, Central Asian countries are faced with increasing challenges to complete their transitions to a market economy and towards economic development and integration.

By: Uuriintuya Batsaikhan and Marek Dabrowski Topic: Global Economics & Governance Date: May 5, 2017
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Blog Post

Alicia García-Herrero

Who would bet on currency unions after EMU crisis?

The European Monetary Union (EMU) was founded with the idea that nominal convergence would bring real convergence, but structural differences between members have proven wide enough to generate lasting asymmetric negative shocks across the euro area.

By: Alicia García-Herrero and David Martínez Turégano Topic: Global Economics & Governance Date: March 29, 2017
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External Publication

ruble

Collapse of the Ruble zone and its lessons

This essay, published by CESifo, aims to summarise the experiences of the two monetary disintegration episodes, i.e. termination of settlements in TR since 1 January 1991 and the gradual collapse of the Soviet ruble area in 1990–1993.

By: Marek Dabrowski Topic: Global Economics & Governance Date: March 15, 2017
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Blog Post

Headshot

Demonetisation: India’s stress test

What were the reasons for the Indian government's sudden decision to remove 86% of hard currency from circulation? Will Modi's monetary intervention achieve its stated aim of fighting corruption? And what will be the wider implications for growth?

By: Suman Bery Topic: Global Economics & Governance Date: January 30, 2017
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External Publication

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Currency crises in post-Soviet economies — a never ending story?

This paper offers an updated and comprehensive analysis of the currency crises in Russia and the former Soviet Union economies.

By: Marek Dabrowski Topic: Global Economics & Governance Date: October 18, 2016
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Blog Post

Silvia Merler

Brexit, the pound and the UK current account

What’s at stake: UK PM Theresa May announced the intention to trigger article 50 by March 2017, the Pound Sterling crashed, and a dispute among Tesco and Unilever has resulted in Marmite shortage. Brexit means Brexit, and it continues to be highly discussed. It would be impossible to summarise all the economic blogosphere on Brexit. Our aim is to periodically update our readers on selected important aspects of what promises to be a long-lived topic of discussion. This time we are looking at economists’ view on the Pound crash and the UK current account.

By: Silvia Merler Date: October 17, 2016
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Opinion

Alicia García-Herrero

The yuan's SDR entry is more symbolism than substance

The yuan's official entry into the International Monetary Fund's basket of reserve currencies on Oct. 1 raised expectations that central banks all over the world would be scrambling to stock up on Chinese money. But the reality is far from that.

By: Alicia García-Herrero Topic: Global Economics & Governance Date: October 7, 2016
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Opinion

Georg Zachmann

Nord Stream 2: a bad deal for Germany and Eastern Europe

Georg Zachmann argues that the Nord Stream 2 project is a danger to the European consensus on relations with Russia. What is more, it could undermine efforts to diversify Europe's gas supply and might risk higher prices for Eastern Europe.

By: Georg Zachmann Topic: Energy & Climate Date: July 18, 2016
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Working Paper

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The China-Russia trade relationship and its impact on Europe

This paper analyses empirically how increasingly close trade relations between China and Russia might affect the European Union.

By: Alicia García-Herrero and Jianwei Xu Topic: Global Economics & Governance Date: July 14, 2016
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Blog Post

Zsolt Darvas

No Lehman moment on currency markets after Brexit vote

While the pound sterling has lost a lot of its value right after the Brexit vote, from a historical perspective neither the fall of the exchange rate, nor its current level, is unprecedented. The situation is not as severe as it was in the aftermath the collapse of Lehman Brothers.

By: Zsolt Darvas Topic: European Macroeconomics & Governance Date: June 30, 2016
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Blog Post

MariaDemertzis1 bw

Bank shares take a hard hit following Brexit

In the past five days a number of banks have seen their stock value decline by large amounts.

By: Maria Demertzis Topic: European Macroeconomics & Governance Date: June 28, 2016
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Past Event

Past Event

China-Russia relations and their impact on Europe

The economic ties between China and Russia are growing. How will this relation affect Europe?

Speakers: Marek Dabrowski, Zsolt Darvas, Alicia García-Herrero, Vasily Gavrilov, Eric Girardin, Matteo Governatori, Iikka Korhonen, Heli Simola, Laura Solanko, SUN Mingxi and Jianwei Xu Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 21, 2016
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