- Florya Chronicles of Political Economy
- Vol: 3 Issue: 2
- Foreign Currency Debt And Economic Growth In The Region Of The Black Sea Economic Cooperation
Foreign Currency Debt And Economic Growth In The Region Of The Black Sea Economic Cooperation
Authors : Zelha Altinkaya
Pages : 1-22
View : 9 | Download : 4
Publication Date : 2017-10-04
Article Type : Research
Abstract :Foreign currency liabilities are often considered as a financial risk factor in the economies. The developing and newly emerging economies had great experiences on the effect of this risk.Mexico, Russia and Turkey were just a few of those countries who suffered from the foreign currency risk in 1994 and 1997. Later, Turkey had one more experience in 2001. The Euro crises which started in 2010, have unexpectedly changed policies in Greece. Foreign currency risk and foreign currency liabilities have a special importance for the member countries of the Black Sea Region. Current paper analyzes the risk which has emerged due to foreign currency volatility in foreign currency liabilities for the economies of the Black Sea Economic Cooperation (BSEC) members. The regional cooperation was started by Turkey’s initiative in 1991 and the organization was found in 25 June, 1992. However, after the 2007 global financial crises, firstly for Greece, economic stability became the primary objective. The BSEC did not offer governments with alternative tools to finance their economies, for instance, by using local currency denominated debts on international bond markets. Emerging economies had more liquidity than before. Expansion of financial markets increased their reserves. However, it is argued that foreign currency debt contracts and their potential financial risks have not been eliminated. In this paper, foreign currency debt management of the BSEC and its effect after 2008 financial crisis will be analyzed.Keywords : foreign currency debt, economic growth, Black Sea Economic Cooperation Region