NBK head called dollarization a big problem

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ALMATY. KAZINFORM Chairman of the National Bank of Kazakhstan Daniyar Akishev called dollarization of the country's economy a big problem. He also told how this phenomenon has been overcome, Kazinform correspondent reports.

Mr. Akishev noted that the high level of dollarization has a negative effect on the work of both STBs and the National Bank. However, this can be avoided in several ways, without using hard methods of ousting the dollar from circulation.

"Dollarization of the economy is a big problem. It impedes implementation of the National Bank's policy because it is the issuer of the national currency. And when the level of deposits in the country, may I remind l that in January 2016, dollarization was 80%, and all deposits of individuals were in foreign currency, under such conditions neither banks could operate, as they did not have tenge, nor the Central Bank could carry out a normal monetary policy, because we use rates in the tenge market, and banks only have dollar," Mr. Akishev noted.

"Therefore, it is necessary to overcome the dollarization. This can be achieved, in our opinion, with market methods. It is clear that there are administrative ways - ways of direct prohibitions, but in Kazakhstan, this way is not acceptable. Therefore, we raised rates on deposits in tenge and lowered rates on foreign currencies. What we see today, is individuals, enterprises, and organizations began to transfer their assets into national currency. And, according to the analysis, in the last 15 months the dollar chart has decreased," the head of Kazakh National Bank added.

It is worth noting, that as early as in 2015, Kazakhstan developed an Action Plan on lowering the level of dollarization, which was approved by the Government and the Board of the National Bank. The plan included three main strategic directions: ensuring macroeconomic stability, developing non-cash payments and reducing the shadow turnover, as well as prioritizing national currency over the foreign.

As of the end of April 2017, deposits in national currency amounted to KZT9,090.2 billion (2.6% increase in a month). Meanwhile, deposits in foreign currency decreased by 1.4% and amounted to KZT8,654.7 billion. For a second consecutive month, the volume of deposits in national currency top those in foreign currency. In April dollarization level continued to decline from 49.8% to 48.8%. Deposits of legal entities in national currency increased by 0.6% in April 2017 and amounted to KZT5,752.5 billion, in foreign currency, they decreased by 0.3% and amounted to KZT4,415.9 billion (43.4% of the legal entities deposits).

 

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