This paper investigates public attitudes toward public sector debt in ten Central, Eastern and Southeastern European (CESEE) countries. Unique data from a special module of the 2018 OeNB Euro Survey wave indicate that people in CESEE have, in general, negative attitudes toward public debt. Most respondents believe that higher public debt compromises the opportunities of future generations and implies higher taxes or lower social benefits in the future. Beliefs that higher public debt allows for higher investments today are also widespread but less common. Econometric analysis reveals that wealthier individuals and more disadvantaged societal groups (particularly people who have experienced economic hardship) tend to be most concerned about public debt. The finding that the worse off are more debt averse contrasts with existing studies for advanced economies that have found that it is primarily the better off who are more skeptical. This difference may be explained by the comparatively lower level of social spending and the predominance of regressive tax systems in CESEE, which could make disadvantaged groups of society believe that the burden of higher debt must eventually be shouldered by them.

OeNB Euro Survey results for ten countries in Central, Eastern and Southeastern Europe (CESEE) from 2018 indicate that a major share of respondents is disappointed with public governance. Yet, while trust in national governments is lacking, there is still a widespread belief that creating jobs is primarily a state responsibility, even 30 years after the onset of transition. As shown by a series of probit regressions, respondents are more likely to consider job creation to be above all a state responsibility if they belong to a low-income household, have comparatively little wealth and comparatively little education, rely on welfare payments, have worked for the public sector or reside outside the capital city. The views of respondents who express a lack of trust in government are also colored strongly by past economic hardship experiences. While there is, of course, a limit to how big the welfare state can get, our survey results imply that there is a case for national governments to build up buffers to be able to tide people over when incomes dry up in crisis episodes, and to invest more in developing human capital and improving social inclusion to address the concerns of marginalized societal groups.

This short study presents data on the use of euro cash as a safe haven asset or as a means of payment over the last decade. We contrast these selected key indicators using OeNB Euro Survey data with the main literature findings on the determinants of currency substitution in Central, Eastern and Southeastern Europe (CESEE). According to these key indicators, euro cash holdings are currently widespread in Albania, Croatia, the Czech Republic, North Macedonia and Serbia. Due to overall declining euro cash amounts in the region, the extent of currency substitution continues its long-term downward trend in all CESEE countries. However, we still see a medium to high level of currency substitution in Croatia, North Macedonia and Serbia. Apparently, the determinants of euroization that have been identif ied in former research are still at work; this f inding rests on the new data points of the key indicators presented here with respect to euroization and CESEE respondents’ preferences for saving in cash or for saving in foreign currency as well as their habit of making certain payments in euro. Finally, we address the question whether EU integration prospects have an impact on people’s propensity to hold euro cash. The simple empirical analysis presented here finds a positive and signif icant influence of expected euro adoption on the likelihood that individuals hold euro cash. However, such expectations do not seem to affect the amounts of euro cash held.

Euroization is a widespread phenomenon in many Central, Eastern and especially Southeastern European countries. From the literature on euroization we derive potential implications of the recently observed reduced interest rate differential between local and foreign currencies for households’ demand for cash holdings, foreign currency deposits and foreign currency loans. We contrast these hypotheses with recent changes in households’ observed saving and borrowing behavior in the region. To this end, we combine information from the OeNB Euro Survey with data from national central banks. The different dynamics of asset and liability euroization observed in the recent period of reduced interest rate differentials in the euroized countries of Southeastern Europe by and large match the theoretical expectations. Based on the literature and the data compiled in this article we conclude that fostering trust in institutions, sustaining macroeconomic stability, providing incentives for saving in the local currency and pursuing a comprehensive policy mix of macro- and micro-prudential measures will help to maintain financial stability and to reduce euroization.

This paper uses microdata from 2014 to examine the determinants of currency substitution in Central, Eastern and Southeastern European (CESEE) countries. To analyze the hysteresis of euroization in these countries, we combine the standard search-theoretic model of money demand with recent findings on the preference of CESEE households for saving in cash as well as with aspects of economic geography. In Southeastern Europe, unlike in Central and Eastern Europe, network externalities and lower trust in the local currency than in the euro are still important factors. Expectations that the local currency will depreciate, income in euro and the expectation of an official adoption of the euro are important explanatory factors for all CESEE countries. Despite the heterogeneity across the region, our results suggest that institutions and policies that foster trust are key to promote de-euroization.

In June 2014, the ECB decided to lower its interest rate on the deposit facility for the first time to below zero with the aim of countering deflation risks. Negative central bank interest rates have no precedent in history and thus raise questions about potential unintended side effects on the economy and the banking system. To evaluate the risks of such side effects, we investigate the development of bank profitability in three European countries that look back on more than one year of negative interest rates: Denmark, Sweden and Switzerland. Overall we conclude that in these countries, negative interest rates have so far not resulted in a significant reduction of bank profitability and particularly of net interest income. Declines in interest income have been more than compensated for by declines in interest expenses. Most fears about unintended consequences of negative interest rates, such as a rush to cash or a reduction of credit supply, have so far not materialized.

This paper uses microdata from 2014 to examine the determinants of currency substitution in Central, Eastern and Southeastern European (CESEE) countries. To analyze the hysteresis of euroization in these countries, we combine the standard search-theoretic model of money demand with recent findings on the preference of CESEE households for saving in cash as well as with aspects of economic geography. In Southeastern Europe, unlike in Central and Eastern Europe, network externalities and lower trust in the local currency than in the euro are still important factors. Expectations that the local currency will depreciate, income in euro and the expectation of an official adoption of the euro are important explanatory factors for all CESEE countries. Despite the heterogeneity across the region, our results suggest that institutions and policies that foster trust are key to promote de-euroization.

Most of the available literature on economic and monetary history deals with the advanced countries of Western Europe and the United States of America. The monetary and financial history of South-Eastern Europe, however, is still largely unexplored. So far, historical study of the monetary policy pursued by these countries has not been systematic. A key drawback was the lack of reliable data. The South-East European Monetary History Network (SEEMHN) brings together financial and monetary historians, economists, statisticians and archivists both from the national central banks and academia. Its goal is to promote knowledge about SEE monetary history and policy. It is viewed as an international collaboratory on measuring money, banking and finance across time and across countries. Knowledge is promoted and experience is exchanged only when they are based on reliable data. Good policy making should be grounded on good data. Recognising the need for reliable data as a basis for empirical studies, the Bank of Albania, the Bank of Greece, the Bulgarian National Bank, the Central Bank of the Republic of Turkey, the National Bank of Romania, the National Bank of Serbia and the Oesterreichische Nationalbank have cooperated since 2006 to establish a database of 19th and 20th century monetary and financial data for South-Eastern Europe. All task force members acknowledge that this goal could only be achieved by combining forces and exchanging knowledge and experience. Therefore, the SEEMHN DCTF involved cooperation between representatives from all SEE national central banks and scholars who are specialised on different fields, geographical regions and time periods. Its first results concern a new statistics publication entitled South-Eastern European Monetary and Economic Statistics from the Nineteenth Century to World War II, which contains a newly compiled, built and harmonised dataset of long-run key monetary and macroeconomic time series. This data volume aims at filling this gap by shedding light on the monetary history of the individual countries in South-Eastern Europe and of the region as a whole. By making this historical database available to a wider audience, the SEEMHN hopes to motivate researchers to further investigate financial and monetary economics of South-Eastern Europe. The volume is foreworded by Yannis Stournaras, Governor of the Bank of Greece, Ivan Iskrov, Governor of the Bulgarian National Bank, Mugur Constantin Isarescu, Governor of the National Bank of Romania, and Ewald Nowotny, Governor of the Oesterreichische Nationalbank, as well as three high-profile scholars: Michael Bordo (Rutgers University and NBER), Luis A. V. Catao (International Monetary Fund and Joint Vienna Institute) and Nicos Christodoulakis (Athens University of Economics and Business). Free access is available on the websites of: Bank of Greece http://www.bankofgreece.gr/Pages/en/Publications/Studies/seemhn.aspx http://www.bankofgreece.gr/Pages/en/Statistics/default.aspx Bank of Albania http://www.bankofalbania.org/web/SEEMHN_7155_2.php Bulgarian National Bank http://www.bnb.bg/ResearchAndPublications/PubNonPeriodical/PubNPFinancialHistory/wwwPubNPSEEMHN/PubNPSEEMHN_INTRODUCTION/index.htm?toLang=_EN National Bank of Romania http://www.bnr.ro/apage.aspx?pid=11792 National Bank of Serbia http://www.nbs.rs/internet/english/90/seemhn/seemhn_dctf/index.html Oesterreichische Nationalbank www.oenb.at/en/Publications/Economics/south-east-european-monetary-history-network-data-volume.html Recommended Citation South-Eastern European Monetary and Economic Statistics from the Nineteenth Century to World War II, published by: Bank of Greece, Bulgarian National Bank, National Bank of Romania, Oesterreichische Nationalbank, 2014, Athens, Sofia, Bucharest, Vienna.

During the crisis period from 2008 to 2013 household disposable income deteriorated significantly in Central, Eastern and Southeastern Europe (CESEE), forcing households to adjust their consumption plans. Against this background, the present paper sheds some light on households’ consumption smoothing behavior based on microdata supplied by the OeNB Euro Survey for ten countries in CESEE. We find that households reacted to stagnating and in some countries falling income mostly by cutting back on everyday consumption and reducing or postponing large expenditures, while other households coped by reducing the amounts they were setting aside as savings or by drawing on existing savings, overdrawing their current accounts and increasing work hours. Moreover, we find that macroeconomic forecasts by the European Commission, the wiiw and the OeNB are broadly in line with economic sentiment among CESEE households. Finally, Euro Survey results revealed that not all households were able to borrow as much as they would have liked to and that the share of households planning to take out a loan fell between 2008 and 2013.

1 According to Nobel laureate Kenneth Arrow, trust is an asset. " Without trust, cooperations break down, financing breaks down and investment stops. […] if there is no trust, there is no progress " (Arrow, 1972). Sapienza and Zingales (2012) present survey evidence for the U.S.A. showing that the global recession following the collapse of Lehman Brothers was inter alia caused by a sharp loss in trust in the financial sector and the economic system in general. Against this background, it is of crucial importance to European policymaking that the citizens of Europe have sufficient trust in EU institutions. A lack of trust may have negative repercussions for European integration as a whole. For the (potential) candidate countries trust in the EU is essential given their strong economic links with EU Member States, their EU integration perspective and the important role of the euro in the region. Therefore, their political and economic future cannot be seen separately from EU policies. The economic and financial crisis of 2008–09 and the ongoing sovereign debt crisis since 2010 have undermined EU citizens' trust in national and European government institutions in many European countries, in particular in the euro area periphery countries which have been most exposed to the crisis, i.e. Greece, Ireland, Portugal and Spain (see Roth et al., 2011). Roth et al. (2011) find that declining trust in the EU can be mainly explained by the deteriorated economic environment during the crisis. 2 Furthermore, citizens' perception of poor crisis management by the European institutions may have also played a role. The lack of tools to address systematically macroeconomic imbalances as well as the political The authors gratefully acknowledge comments by Thomas Gruber (OeNB). 2 Unemployment and debt over GDP are found to be the central explanatory variables for declining trust in EU institutions during the crisis period (see Roth et al., 2011). The economic and financial crisis of 2008–09 and the ongoing sovereign debt crisis since 2010 have undermined EU citizens' trust in national and European government institutions in many European countries. Against this background we look at trust in the EU in Central, Eastern and Southeastern Europe (CESEE) on the basis of results obtained from the OeNB Euro Survey. While we find that trust in the EU differs largely across the CESEE countries of the sample, the results are broadly comparable to average levels obtained for euro area countries over the …

Many Central, Eastern and Southeastern European (CESEE) economies experienced periods of hyperinflation during transition. Given the importance of trust for households’ financial decision making, we analyze how memories of high inflation influence people’s trust in currencies. Individuals who have lived through periods of economic turbulence are more likely to perceive the euro as more trustworthy than the local currency. Individuals who have experienced hyperinflation retain an inclination for a safe haven currency and remain more alert to economic turbulence and prone to distrust currencies in general.

The euro has been the predominant safe haven currency for households in Southeastern Europe (SEE). Recent results of the OeNB Euro Survey show that the sovereign debt crisis had a substantial impact on households’ trust in the euro but nevertheless suggest that the euro has not been displaced as a safe haven currency. The euro remains more trusted than the local currencies, and households’ preferences and decisions with regard to the currency denomination of their savings indicate that larger portfolio shifts are at present unlikely.

Micro data collected in the OeNB Euro Survey show that in the aftermath of the global economic and financial crisis, households have come to perceive foreign currency loans as riskier, above all in those Central, Eastern and Southeastern European (CESEE) countries that experienced depreciations during the crisis. Despite this perceived increase in risk, a majority of respondents in six out of nine countries sill regard loans in euro as more attractive than loans in domestic currency. Data about the motives indicate that both supply and demand factors drive foreign currency loans. The mutual interest of banks and households and the still high attractiveness of foreign currency loans suggest that foreign currency borrowing is unlikely to vanish without policy intervention. If foreign currency borrowing were to be curbed in the short run, the only option for policymakers would be the implementation of regulatory and supervisory measures.

Based on descriptive evidence obtained from the latest OeNB Euro Survey, this contribution examines whether the widespread use of the euro among households in Central, Eastern and Southeastern Europe (CESEE) has been affected by the ongoing sovereign debt crisis in the euro area. Although households’ confidence in the euro has decreased substantially in all CESEE countries, it is still stronger than confidence in the respective local currencies in all countries except the Czech Republic. Despite this loss of trust in the euro, the relative weight of euro cash in the total economy is still substantial in several Southeastern European countries. Aggregate data on the development of foreign currency deposits in total deposits provide a mixed picture across countries. The overall degree of euroization – comprising cash holdings and deposits – has remained surprisingly stable in CESEE over time and has hardly been affected by the crisis in the euro area. Interestingly, in some countries the relative contribution of foreign currency deposits to overall euroization has increased against precrisis levels, whereas euro cash holdings have lost in relative importance.