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SHOULD ARMENIA CONVERT FOREIGN CURRENCY LOANS INTO NATIONAL CURRENCY UNITS? - ECONOMISTS
11:13 * 10.03.15
Converting foreign currency loans into national currency units is the
best way for a country to avoid further dollarization, an economist
has said, considering the Russian currency policies exemplary also
for Armenia.
"The only way out of the Dollar race is for people to realize that
the Dram is their country's currency, and the [national] flag is
the Armenian tricolor, not the US flag; that's it. Why I say this is
because the more the country dollarized, the more your flag repeats
the United States' flag. So a country's economy cannot have Dollars
in such an amount," Vilen Khachatryan told Tert.am.
He cited the Dollar loans and deposits as the most vivid evidence of
a dollarized economy.
Studies by the Central Bank of Armenia reveal that the banks' 2015
loan portfolio totals 2.134 Drams, of which 1.342 Drams (60%-65%)
was issued in a foreign currency (USD, Euro or Russian Ruble).
As of January, the deposits amounted to 729 billion Drams, of which
847 billion Drams (45%-50%) was in a foreign currency.
Khachatryan said he finds Dollar loans conversion into Drams
technically possible.
"If a powerful country like Russia does that, it is definitely
possible," he said.
Mikael Melkumyan, an economist lawmaker of the Prosperous Armenia
party, hailed the idea but at the same time, pointed out to possible
economic risks which he said will not be limited to banks alone as
private entities. He said he doesn't think that problems arising from
risks are solvable on the level of banks and individual entrepreneurs.
"A government institution has to make an intervention to create a
triangle sharing the risks among three, because the banks themselves
are likely to incur damages in such a case," the economist said,
adding that he now works on a draft envisaging loan issuances at a
2%-4% interest rate.
But he didn't give further details.
"I repeat, those risks have to be divided into three parts, but
there has to be a clear scheme which I cannot elaborate on now for
understandable reasons," he added.
Speaking to Tert.am, Hayk Gevorgyan, an economic commentator for the
Armenian daily Haykakan Zhamanak, expressed his disapproval of the
loan conversion policies, considering them anti-liberal.
"It isn't as if [the citizen] borrowing a loan has already taken
risks. If the Dollar had depreciated, there wouldn't naturally be
any complaints. So the same logic suggests that the banks themselves
should have taken to streets [for a protest]," he added.
Gevorgyan said he finds that any citizen borrowing a loan has to
make the risk assessments himself or herself before concluding the
transaction. He added that unwritten laws in any country require that
bank clients borrow loans in their national currency.
http://www.tert.am/en/news/2015/03/10/dollar/1612294
11:13 * 10.03.15
Converting foreign currency loans into national currency units is the
best way for a country to avoid further dollarization, an economist
has said, considering the Russian currency policies exemplary also
for Armenia.
"The only way out of the Dollar race is for people to realize that
the Dram is their country's currency, and the [national] flag is
the Armenian tricolor, not the US flag; that's it. Why I say this is
because the more the country dollarized, the more your flag repeats
the United States' flag. So a country's economy cannot have Dollars
in such an amount," Vilen Khachatryan told Tert.am.
He cited the Dollar loans and deposits as the most vivid evidence of
a dollarized economy.
Studies by the Central Bank of Armenia reveal that the banks' 2015
loan portfolio totals 2.134 Drams, of which 1.342 Drams (60%-65%)
was issued in a foreign currency (USD, Euro or Russian Ruble).
As of January, the deposits amounted to 729 billion Drams, of which
847 billion Drams (45%-50%) was in a foreign currency.
Khachatryan said he finds Dollar loans conversion into Drams
technically possible.
"If a powerful country like Russia does that, it is definitely
possible," he said.
Mikael Melkumyan, an economist lawmaker of the Prosperous Armenia
party, hailed the idea but at the same time, pointed out to possible
economic risks which he said will not be limited to banks alone as
private entities. He said he doesn't think that problems arising from
risks are solvable on the level of banks and individual entrepreneurs.
"A government institution has to make an intervention to create a
triangle sharing the risks among three, because the banks themselves
are likely to incur damages in such a case," the economist said,
adding that he now works on a draft envisaging loan issuances at a
2%-4% interest rate.
But he didn't give further details.
"I repeat, those risks have to be divided into three parts, but
there has to be a clear scheme which I cannot elaborate on now for
understandable reasons," he added.
Speaking to Tert.am, Hayk Gevorgyan, an economic commentator for the
Armenian daily Haykakan Zhamanak, expressed his disapproval of the
loan conversion policies, considering them anti-liberal.
"It isn't as if [the citizen] borrowing a loan has already taken
risks. If the Dollar had depreciated, there wouldn't naturally be
any complaints. So the same logic suggests that the banks themselves
should have taken to streets [for a protest]," he added.
Gevorgyan said he finds that any citizen borrowing a loan has to
make the risk assessments himself or herself before concluding the
transaction. He added that unwritten laws in any country require that
bank clients borrow loans in their national currency.
http://www.tert.am/en/news/2015/03/10/dollar/1612294