02071cas a2200277 a 4500 AALejournalIMF018314 230101c9999 xx r poo 0 0eng d 5.00 USD 9781484345313 1018-5941 BD-DhAAL BD-DhAAL della Valle, Guido. The Effective Lower Bound for the Policy Rate in Euroized Economies-An Application to the Case of Albania / Guido della Valle, Erald Themeli, Romain Veyrune, Ezequiel Cabezon. Washington, D.C. : International Monetary Fund, 2018. 1 online resource (28 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Based on the experience of the Bank of Albania, the paper proposes a framework to estimate the interest rate lower bound in small, open, and euroized economies. The paper introduces a stylized monitoring tool to assess the unintended consequences of low policy rates. The paper is the first attempt to estimate the impact of low interest rate on the public's demand for banknote by denomination. A strong preference for banknotes leads economic agents to require a higher remuneration of banks' deposits, lifting the lower bound above zero. Financial euroization also lifts the lower policy bound due to the higher propensity of substituting domestic with foreign currency-denominated assets as a function of the interest rate differential. Policies aiming at reducing financial euroization contribute to bring down the lower bound. Mode of access: Internet Cabezon, Ezequiel. Themeli, Erald. Veyrune, Romain. IMF Working Papers; Working Paper ; No. 2018/055 Full text available on IMF http://elibrary.imf.org/view/journals/001/2018/055/001.2018.issue-055-en.xml IMF e-Library