ẢNH HƯỞNG TÍCH LŨY dự TRỮ NGOẠI hối đến LẠM PHÁT VÀ HOẠT ĐỘNG CAN THIỆP TRTOM TAT LUAN AN tieng anh

1 MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM BANKING UNIVERSITY HO CHI MINH CITY NGUYEN THI KIM PHUNG THE IMPACT OF FOREIGN RESERVES ACCUMULATION ON INFLATION AND STERILIZATION OF THE STATE BANK OF VIET NAM SUMMARY OF PHD THESIS Major : Finance - Banking Code : 9.34.02.01 Candidate : NGUYEN THI KIM PHUNG Course: 20 Scientific Supervisors: Ass Prof HOANG THI THANH HANG Ass Prof VO XUAN VINH HO CHI MINH CITY – 2018 CHAPTER INTRODUCTION OF THE RESEARCH 1.1 Background and Statement of the Research Financial globalization and the expansion of international capital flows have benefited nations But these also increase the risk of financial crisis Developing countries have accumulated a considerable amount of foreign reserves to deal with a series of financial crises in the world In addition to the role of financial stability, foreign reserves can have direct or indirect impact on the macroeconomic through various aspects (Drummond et al, 2009; Hviding et al, 2004; etc.) However, the foreign reserves accumulation increases the base money and the expansion of money supply if central bank doesn’t sterilize conducive to inflation Sterilization occurs when the central bank performs simultaneous transactions on foreign assets and domestic assets to neutralize the effects of foreign exchange market intervention on domestic money supply In the trend of international economic integration, in recent years, foreign reserves of Vietnam have increased, and the tendency of accumulation foreign reserves in Vietnam is necessary next time Vietnam is in the process of deep integration in finance and other fields, changes in macroeconomic policies and economic environment continue to cause difficulties and challenge for policy managers Clear understanding of the spread effects of accumulating foreign reserves on inflation as well as sterilization contribute significantly to the policy management of the State Bank of Vietnam (SBV), help to the success and sustainability of the economy The above information are the practical meanings of the research In theory, the thesis is studied on the basis of exploring the gaps that previous studies is not mention There are many papers analyzing relationship between foreign reserve accumulation and inflation for different countries and group of countries, such as Heller (1979), Khan (1979), Lin &Wang (2005), Elhiraika & Ndikumana (2007), Steiner (2009), Borivoje & Tina (2015), Chaudhry et al (2011), Chen & Huang (2012), Zhou et al (2013), Pham Thi Tuyet Trinh (2015), etc However, no papers have investigated the characteristics of each country's economy, which characterizes the Vietnamese economy as a dollarized economy Therefore, this study focuses on assessing the impact of accumulating reserves on inflation in a dollarized economy In terms of sterilization, there have been some studies on the effectiveness of central bank intervention in some countries, mainly in emerging markets such as Latin America countries (Aizenman & Glick, 2009; Ljubaj et al, 2010) and Asian countries (Glick & Hutchison, 2009; Ouyang et al, 2010 ; Wang, 2010 ; He et al,2005; Takagi & Esaka, 2001; Cavoli & Rajan, 2006) In Vietnam, there are studies by Pham Thi Tuyet Trinh and Nguyen Thi Hong Vinh (2011), Pham Thi Hoang Anh and Bui Duy Phu (2013), Dang Van Dan (2015) with the results show that the SBV's sterilization has not been effective in the past However, in the above studies, no studies have evaluated the sterilization’s effectiveness in the context of dollarized economies The thesis will focus on the sterilization’s effectiveness of the SBV in the context of a dollarized economy In addition, during the study period, the global financial crisis occurs in 2007 and 2008, so the thesis also considers whether the global financial crisis has an impact on the effectiveness of the SBV's sterilization From the practical and theoretical point of view, the topic "The impact of foreign reserves accumulation on inflation and sterilization of the State Bank of Vietnam" has been chosen 1.2 Objectives of the study 1.2.1 General objective of the study The dissertation examines the influence of foreign reserves accumulation on inflation and sterilization of the SBV to ensure the stabilization of monetary policy for social and economic development 1.2.2 Specific objectives of the study From the general objective, the thesis aims to achieve the following specific objectives: First, assessing the current status of foreing exchange reserves, dollarization and tools of the sterilization in Vietnam Second,evaluating the short-term and long-term effects of accumulating foreign reserves on inflation in Vietnam in the context of a dollarized economy Third, examining the effectiveness of the neutral intervention of the SBV in the context of a dollarized economy and studying the impact of the two factors : dollarization and global financial crisis on the sterilization’s effectiveness of the SBV Finally, exploring the experience of sterilization in some countries around the world to provide experience lessons for Vietnam 1.3 Research questions From the above specific objectives, the research questions are as follows: + How is the current status of foreing exchange reserves, dollarization and tools of the sterilization in Vietnam ? + How does accumulation of foreign reserves in short-term and long-term impact on inflation in Vietnam in the context of dollarized economy? + How is the sterilization’s effectiveness of the SBV in the context of the dollarized economy + Do dollarization and the global financial crisis change the level of SBV sterilization’s effectiveness? + How is the experience of sterilization in terms of tools, effectiveness, sustainability and financial costs in some countries around the world and what are lessons for Vietnam? 1.4 Research subjects and scopes of the study - The research subjects are the effect of accumulation of foreign reserves on inflation and the sterilization of the SBV - The scopes of the study: +Space: The thesis examines the impact of foreign exchange reserves on inflation and sterilization in Vietnam 5 +Time: Thesis studies in Vietnam from the first quarter of 2004 to the second quarter of 2017 1.5 Research methodology The thesis uses quantitative research method (ARDL Bound Test Model and 2SLS Estimation) in combination with synthesis, analysis, comparison and case study 1.6 Contributions of the thesis The dissertation provides a comprehensive theoretical basis for the mechanism of impact of accumulating foreign exchange reserve effects on inflation and sterilization The thesis first time examines these issues in the context of a dollarized economy Moreover, the study first time analysis in deep whether dollarization and global financial crisis change the sterilization’s effectiveness in Vietnam The dissertation proposes some policy recommendations and experience lessons for the SBV to neutralize unwanted effects on the economy as the SBV accumulates foreign exchange reserves 1.7 Structure of the thesis The dissertation consists of five chapters: Chapter 1: Introduction of the research Chapter 2: Theoretical background and empirical evidence on the impact of foreign reserves accumulation on inflation and sterilization of the central bank Chapter 3: Research methodology and data Chapter 4: Research Results and Discussion Chapter 5: Conclusions and policy implications CHAPTER THEORETICAL BACKGROUND AND EMPIRICAL EVIDENCE ON THE IMPACT OF FOREIGN RESERVES ACCUMULATION ON INFLATION AND STERILIZATION OF THE CENTRAL BANK 2.1 Some concepts  Accumulation of foreign reserves Foreign reserves are those external assets that are readily available to and controlled by monetary authorities for meeting balance of payments financing needs, for intervention in exchange markets to affect the currency exchange rate, and for other related purposes such as maintaining confidence in the currency and the economy, and serving as a basis for foreign borrowing (IMF, 2009) Accumulation of a country's foreign reserves is an activity which gradually increases the country's foreign exchange reserves through a period of time Inside, foreign reserves are foreign assets that are available and controlled by the monetary authority of the country in order to meet the balance of payments requirements, to intervene in the foreign exchange market for impacting exchange rates and other related purposes  Sterilization of central bank According to Krugman et al (2012), sterilization occurs when the central bank performs simultaneous transactions on foreign assets and domestic assets for neutralizing the impact of central bank interventions in foreign markets on the domestic money supply 7 2.2 Mechanism of the impact of foreign reserves accumulation on inflation and sterilization of the central bank 2.2.1 Mechanism of the impact of foreign reserves accumulation on inflation  The mechanism of impact of foreign reserves on inflation through monetary channel Accumulation of foreign exchange reserves affects inflation through the following mechanisms: The increase in foreign reserves led to a change in the money supply of a country, and the increase in money supply affected the country's inflation This mechanism is explained in two phases: (i) Impact of accumulating foreign reserves on money supply (ii) Impact of money supply on inflation In closing, the impact of foreign reserves on inflation can be summarized in the following diagram: Foreign reserves   Money Base   Money Supply   Inflation   The mechanism of impact of foreign reserves on inflation through channels of receiving allocated SDRs by IMF Receiving allocated SDR does not cause inflation but the use of SDR can lead to inflation With increased international liquidity due to loosening foreign reserve limits, countries that receive allocated SDRs will pursue broader monetary policy This in turn affects the money supply and causes inflation as above mechanism 2.2.2 The mechanism of sterilization  Sterilization in the narrow sense Sterilization in the narrow sense reflects interventions by central banks to reduce the money base in the economy as the central bank purchases foreign currency in the foreign exchange market When the central bank purchases foreign currency in the foreign exchange market without a neutral intervention, this result will increase Net Foreign Assets (NFA) and Base Money (MB) If the central bank sterilizes, instead of increasing MB, the Net Domestic Assets (NDA) will decrease to the right amount by an increase in MB if there is no sterilization Sterilization in the broad sense Sterilization in the broad sense reflects the central bank's intervention to reduce the money supply in the economy as the central bank purchases foreign currency in the foreign exchange market In order to preform this matter, the central bank will use measures to affect the money multiplier to reduce the ability to make money of commercial banks 2.3 Empirical evidences 2.3.1 Empirical studies of the impact of foreign reserves accumulation on inflation The previous papers estimate the effect of foreign reserves accumulation on inflation in two ways: though monetary channel and though receiving allocated SDRs by IMF channel According to the monetary channel, the empirical studies approaches in three way: worldwide, group of countries and different countries +The studies analyzing in the worldwide include: Heller (1979), Khan (1979), Rabin & Pratt (1981), Heller (1981), Steiner (2009), Steiner (2017) +The studies analyzing group of countries include: Lin & Wang (2005), Elhiraika & Ndikumana (2007), Borivoje & Tina (2015) + The studies analyzing different countries include: Chaudhry et al (2011), Chen & Huang (2012), Zhou et al (2013), Pham Thi Tuyet Trinh (2015) According to the receiving allocated SDRs by IMF channel, there are two representative papers: Neumamn (1973) and Chitu (2016) 2.3.2 Empirical studies of the efficiency of central banks sterilization The empirical studies of the efficiency of central banks sterilization in the world are divided into two main approaches The first approach primarily examines the relationship between the NDA and the NFA in the monetary policy reaction function with two main estimation methods, the Ordinary Least Square method and the Vector Auto Regression model, includes the papers: Moreno (1996), Takagi & Esaka (2001), Cavoli & Rajan (2006), Aizenman & Glick (2009), Glick & Hutchison (2009), Pham Thi Tuyet Trinh & Nguyen Thi Hong Vinh (2011), Dang Van Dan (2015), He et al (2005) The second approach used simultaneous equations to examine the relationship between NDA and NFA and applies the Two Stage Least Squares (Or Three Stage Least Squares if needing to fix autocorrelation between residuals), includes the papers: Brissimis et al (2002), Ouyang et al (2010), Wang (2010), Ljubaj et al (2010), Ouyang & Rajan (2011) 2.4 The research gaps 2.4.1 The research gap of the impact of foreign exchange reserve on inflation In Vietnam, the effect of accumulating foreign reserves on inflation through using SDRs channel can be considered as insignificant, so this channel is ignored and the thesis only analyzes the relationship between foreign reserves accumulation and inflation through monetary channel According to the monetary channel, there are many studies established a research equation by examining the direct relationship between foreign reserves and inflation, or through the intermediate variable, money supply, such as Heller (1979), Khan (1979), Rabin & Pratt ( 1981), Abdullateef & Waheed (2010), Chaudhry et al (2011), Zhou et al (2013) Therefore, they not clearly reflect the relationship between accumulation of foreign reserves and inflation In addition, there is no study evaluating the effect of foreign reserves accumulation on inflation that examines the characteristics of the dollarized economy So that, the thesis will focus on clarifying this problem 2.4.2 The research gap of effectiveness of central bank’s sterilization In general, all previous studies aimed to estimate the sterilization coefficient and the offset coefficient to evaluate the effectiveness of central bank’s sterilization But in the previous studies, there has been no study assessing the effectiveness of sterilization in the context of dollarized economy In addition, the global financial crisis has had a significant impact on the performance of central banks and has not been mentioned in previous studies Thus, the thesis will assess the impact of dollarization and the global financial crisis on the effectiveness of the SBV’s sterilization 10 CHAPTER RESEARCH METHODOLOGY AND DATA 3.1 Conceptual model 3.1.1 Conceptual model of impact of foreign reserves on inflation The model was originally derived from Steiner (2009) In addition, to consider the effect of accumulating foreign reserves on inflation in the context of a dollarized economy, the authors adds dollarization to the research model Conceptual model is as follows: P = f (NFA, NDA, mm, V, Y, DL) (3.1) Where mm is the money multiplier; V is the velocity of money; DL is the rate of dollarization of the economy and Y is aggregate output 3.1.2 Conceptual model of effectiveness of the SBV’s sterilization Based on the study by Brisimiss & ctg (2002), Ouyang & Rajan (2011) and combined with an analysis of the dollarized economy, the thesis uses the following simultaneous equations: NDA*t = 0 +1NFA*t + 2Dmmt +3DCPIt-1 + 4 Yt-1 + 5CAt-1 + 6(r*t+ Etet+1) + 7DDLt-1+8KH +9(d1-1) r,t-1+ 10ut (3.6) NFA*t = 0 +1NDA*t+ 2mmt +3CPIt-1+ 4Yt-1+ 5CAt-1 + 6(r*t+ Etet+1) + 7DLt-1+ 8KH + 9(d2-1) e,t-1 + 10vt (3.7) Where: CPI is the inflation; CA is the current account; r* + Ee is the foreign interest rate plus the expected nominal exchange rate; r is the interest rate volatility; e is the exchange rate volatility and KH is the financial crisis 3.2 Estimation method 3.2.1 Estimation method of the model which evaluates the impact of accumulating foreign reserves on inflation The study usgh the scale of foreign reserves in Vietnam is not seriously warned but it is still quite low 4.1.2 The status of dollarization in Vietnam The rate of dollarization has been continuously decreasing since 2004 According to the IMF, a highly dollarized economy when the ratio of foreign currency deposits and total means of payment is over 30% Thus, during the study period, the rate of dollarization in Vietnam is not as high as the IMF warning, always below 25% and improved gradually 4.1.3 The status of sterilizing instruments used in Vietnam The SBV mainly sterilizes the money base when intervening in the foreign exchange market using the Open market Operation (OMO) Over time, OMO has gradually been used by the SBV to regulate the monetary market It helps the SBV stabilizes the money supply and controls inflation During the period both against inflation and sterilization (2007 and 2008), reserves requirement and other instruments such as refinance rate, rediscount rate, government deposit have the effect of being sterilization instruments However, these instruments are not used in time to sterilize, they just are used to implement national monetary policy 17 4.2 Research results 4.2.1 Research results of the impact of foreign reserves accumulation on inflation in Vietnam After satisfying the diagnostic testing conditions of the ARDL Bound Test model, the results of long-term impact are shown as follows: Table 4.13 Estimated long run coefficients and speed of adjustment coefficient Variable Coefficient Standard Error t statistic Prob NFAt* 0.38 (***) 0.11 3.23 0.0031 NDAt* 0.54(***) 0.15 3.43 0.0019 mmt 0.20(***) 0.02 7.11 0.0000 Yt 0.02(**) 0.00 2.15 0.0396 Vt 0.40(***) 0.12 3.33 0.0024 DLt -0.38(***) 0.05 -7.18 0.0000 ECt-1 -0.28 (***) 0.02 -10.25 0.0000 Sources: Author’s calculation In addition, to evaluate the short-term effects of accumulation of foreign reserves and dollarization to inflation, the author continues to test the Wald Test of the coefficients of NFA *t and DL variables in the difference equation (3.8) The estimation results are as follows: Table 4.14 Wald test results for ECM equations Wald Test Variable t- statistic Prob NFA* 5.49 0.000 DL 8.08 0.000 Sources: Author’s calculation 18 Thus, the results show that the null hypothesis H0, the coefficients of the variables NFA * and DL in the difference equation (3.8) are zero, are rejected This shows that the coefficients are non-zero Therefore, in the short run, both NFA *t and DL have an impact on CPI 4.2.2 Research results of the effectiveness of the SBV’s sterilization The estimation results of the sterilization coefficient and offset coefficient are shown in Table 4.19 Table 4.19 The estimation results of the sterilization coefficient and offset coefficient Variable Equation (3.6) Equation (3.7) NDA*t - NFA*t -0.680***(0.149) MMt -0.395***(0.045) -0.372***(0.037) CPIt-1 -0.064(0.153) -0.161(0.118) Yt-1 -0.245(0.332) -0.386(0.261) CAt-1 -0.046(0.073) 0.098**(0.032)  (r*t+Eet+1) 0.034(0.147) 0.172(0.123) DLt-1 -0.015(0.059) -0.145**(0.067) KH 0.046(0.283) 0.527***(0.135) (d1-1)r,t-1 -0.231*(0.132) -0.880***(0.122) - (d2-1)e,t-1 - -0.818(0.518) AR(1) - -0.305***(0.114) R2 0.920 0.933 SE 0.023 0.023 Correlation LM Test ( P_ value ) 0.714 0.172 Heteroskedasticity Test: ( P _ value ) 0.119 0.98 ADF Test of residual -7.808*** -7.24(***) Note: (***): Significance at 1%; (**) : Significance at 5% ; (*) : Significance at 10% Data in parentheses () is standard error 19 Sources: Author’s calculation In order to evaluate whether dollarization changes the effectiveness of the SBV's sterilization through offset coefficient, the authors continue to perform tests in Equation (3.7) with the interactive variable DDLt-1 * DNDA The results showed that DDLt-1 * DNDA was not statistically significant (P value = 0.4135) Although dollarization has an impact on the NFA, dollarization has not changed the level of NDA impact on the NFA Thus, dollarization does not directly affect the offset coefficient Continuing the same test for KH, the results are as follows Table 4.20 The result of estimating the coefficient of offset with interactive variable Variable Coefficient Standard Error NDA*t - 0.733 *** 0.148 KH 0.311** 0.011 KH*NDA*t -0.343** 0.138 Note: (***): Significance at 1%; (**): Significance at 5%; (*): Significance at 10% Sources: Author’s calculation Thus, estimation coefficients are statistically significant The author continues to perform Wald Test with KH variable and interactive variable KH*NDA*t The result shows that the null hypothesis (these coefficients are zero) is rejected (P value = 0.0001) This mean that there is a difference in NFA variability in crisis condition and in no crisis condition The results of rolling estimation of sterilization coefficient and offset coefficient are shown in figure 4.22 20 -0.4 -0.5 -0.5 -0.6 -0.7 -0.6 -0.8 -0.7 -0.9 -0.8 -1 -0.9 -1.1 Hệ số can thiệp trung hòa +2se -2se Hệ số bù đắp +2se -2se Figure 4.22 The results of rolling estimation of sterilization coefficient and offset coefficient Sources: Author’s calculation 4.3 The sustainability and financial costs of sterilization in Vietnam Pham Thi Tuyet Trinh (2015) studied sterilization in Vietnam with a view from the financial costs Accordingly, the SBV has not bear the financial cost of the sterilization yet, remains at a surplus However, this surplus is not sustainable because it depends on the fluctuation of the VND / USD exchange rate and the ratio of USD in Vietnam's total foreign reserves Therefore, in the future, if the SBV continues to accumulate foreign reserves, the sustainability of the sterilization will be uncertain 4.4 Sterilization experience of some central banks and lessons for Vietnam After studying the sterilization in China, India, South Korea, Thailand, Colombia and Slovenia, the author finds the following lessons: The purpose of sterilization is to balance liquidity in the domestic money market as the central banks accumulates foreign reserves The main sterilization instrument used by all countries is OMO In addition, some countries also use other sterilization tools such as reserves requirement and government deposits to stabilize the market In addition to sterilization, other financial policy measures are also used to control capital inflows, such as in Korea and Thailand 21 In terms of efficiency, sustainability, and financial costs of sterilization, in general, with the efforts of the central bank, the sterilization of these countries have been effective They reduce liquidity surplus when accumulating foreign reserves However, sterilization is only effective in the short term In the longer term, the sustainability of sterilization is affected because central banks are difficult to maintain financial costs for this activity 4.4.3 Experience lessons for Vietnam First, using open market operations as the sterilization tool Second, reducing financial costs to maintain sustainability of sterilization Third, controlling foreign capital inflow 22 CHAPTER CONCLUSIONS AND POLICY IMPLICAITONS 5.1 Conclusions Firstly, Vietnam's foreign reserves from the first quarter of 2004 to the second quarter of 2017 tend to increase Secondly, dollarization is always concerned by the SBV Thirdly, when considering the impact of accumulating foreign reserves on inflation in the context of a dollarized economy, the results shows that when the accumulation of international reserves and other macroeconomic variables change, the time for inflation to return to equilibrium in the long run is approximately one year In addition, both dollarization and foreign reserves accumulation have a short-term impact on inflation In the longer term, accumulation of foreign exchange reserves has positive impact on inflation, while dollarization has the opposite effect Fourthly, when considering the sterilization effectiveness in Vietnam in the context of a dollarized economy during the period of Q1/ 2004 to Q2/2007, the sterilization effectiveness has improved, but the SBV has not yet neutralized all spillover effects on money supply as intervening in the foreign exchange market Sterilization was not effective with a sterilization coefficient of 67.98% Fifthly, the high offset coefficient (88.0%) indicates that the SBV has failed to control capital inflows with monetary policy instruments The financial crisis of 2007 – 2008 directly affected the effectiveness of the SBV's sterilization Sixthly, although dollarization has not directly affected the effectiveness of the SBV's sterilization, dollarization has the opposite impact on accumulating foreign reserves Seventhly, the rolling estimation results of sterilization coefficient and offset coefficient show that the sterilization coefficient tends to decrease while the offset coefficient tends to increase during the period of the third quarter of 2016 until now 23 Finally, the sterilization instrument used mainly in Vietnam and other countries is OMO Other instruments are rarely used Almost countries have to bear high financial costs for sterilizations In Vietnam, in the long term, the sustainability of neutral intervention is affected by exchange rate changes and the ratio of the US dollar in total foreign reserves 5.2 Policy implications There are five policy implications, include: First, increasing accumulation foreign reserves and continuing to fight against dollarization in the economy Second, flexibly using sterilization tools, especially OMO Third, reducing the financial costs, increasing sustainability of sterilization Fourth, strengthening forecasts, analyzing the domestic and international money market, alerting to process if the financial crisis occurs And finally, controlling capital flow during the integration process To solve the above issues, the specific solutions below for each management agency 5.2.1 Recommendations to the Government First, improving the legal basis for macro economic management in all areas, especially the legal basis related to import and export activities, foreign investment, remittance policies and foreign exchange control policies Second, continuing to implement policies which promote exports, attract foreign investment and attract remittances Third, improving the domestic infrastructure, ensuring security and national defense Fourth, controlling inflation The Government should direct relevant ministries and agencies to coordinate, especially with the SBV, to control domestic inflation and stabilize the value of the currency Fifth, issuing anti-dollarization scheme for the next period Finally, controlling capital inflows and outflows 24 5.2.2 Recommendations to the SBV First, continuing to actively, flexibly operate the monetary policy, closely coordinating monetary policy and other macroeconomic policies to control inflation, stabilize macro-economy, maintain stability money market Second, continuing to take measures to improve the position of Vietnam dong, encouraging the use of Vietnam dong and limiting the use of foreign currency Third, stepping up the inspection and supervision and strengthening to handle violates in the foreign exchange field, against money laundering and foreign reserves loss Fourth, focusing on measures to maximize the effectiveness of OMOs In addition, other additional neutralizing instruments should also be flexibly used as reserves requirements, government deposits Fifth, focusing on measures to increase the profitability of the foreign reserves held by the SBV in order to increase revenues from foreign reserves and increase the sustainability of the sterilization Sixth, there should always be a team of excellent analysts who are not only wellequipped with financial knowledge but also have experience in the field of research Finally, coordinating with other ministries to control the capital inflows and outflows 5.3 Limitations of the thesis and further research directions Due to limited information, the thesis only studies in the period from Q1 / 2004 to Q2 / 2017 and the SBV's intervention costs have not been calculated Moreover, during the study period, the SBV changed the exchange rate regime from the interbank exchange rate to the central exchange rate in January 2016 Therefore, next research should study for a longer period of time, carry out estimations before and after the change of the exchange rate management mechanism and investigate the costs of sterilization if actual data can be obtained from the SBV./  ... channel can be considered as insignificant, so this channel is ignored and the thesis only analyzes the relationship between foreign reserves accumulation and inflation through monetary channel... Significance at 1%; (**) : Significance at 5% ; (*) : Significance at 10% Data in parentheses () is standard error 19 Sources: Author’s calculation In order to evaluate whether dollarization changes... time, carry out estimations before and after the change of the exchange rate management mechanism and investigate the costs of sterilization if actual data can be obtained from the SBV./