De-euroisation measures may cause capital flight to EU: Xhepa at Civici’s “Argument”

Economy expert Selami Xhepa claims that BoA’s measures aimed at increasing the impact of the local currency in the economy could lead to a financial market contraction and investors may be forced to find investment alternatives abroad.

While talking for “Argument”, hosted by journalist Enio Civici, Xhepa said that there can be many domestic investors who might be interested in taking loans in euro, because they operate in that currency.

S.Xhepa: The Bank of Albania should look at how it can really develop the financial system, rather than shrinking it. I think that in this current way they are shrinking the financial market.

E.Civici: For as long as control measures are in place?

S.Xhepa : Of course, the more you stress rigidity for investment alternatives in euro, the more investors and banks, as part of the financial system, will find alternatives abroad, because abroad there’s zero risk in terms of the risk of exchange rate. There may be internal investors who are interested in receiving loans in euro. Why? Because they make their payments abroad and payments abroad are made in euro currency. And consequently, the risk of exchange rate in such cases is zero – I’m talking about case when investors provide their income in euro and make their payments in euros

E.Civici: While other Albanians who make their payments in ALL are okay despite interventions from the Bank of Albania?

S.Xhepa: Of course! Nothing changes. This just increases the costs of the interest rate on any loan granted to domestic entities in euro or dollar currencies. Any kind of regulation is excessive, as it happened in this case.

A range of measures have been planned for this year with the aim of de-euroization of the economy and to increase the impact of the country’s currency.

Euroisation (large exposure in euro) of the financial and banking system has an effect on the stability of the financial system, given that a large part of the loans are in euro.

Having income in the local currency at a time when the loan is in euro, exposes borrowers to the risk of exchange rate which further affects the performance of the loans, then creating a chain effect in the economy.

SCAN

*Material i përgatitur nga portali SCAN. Ripublikimi mund të bëhet vetëm kundrejt citimit të autorësisë dhe burimit origjinal.