A glance at Figure 2 reveals that the most likely candidates for contributing to de-euroization are the MRR, after its rate was set to its maximum level of 55 %, the introduction of FCICR risk weights, before they were increased to 50 percentage points, and the inclusion of foreign currency-indexed deposits into the calculation of the FCLR requirement.
In particular, Model D1 suggests that setting the MRR rate to its maximum level of 55 % could have been the trigger for de-euroization, while including the foreign currency-indexed deposits into the FCLR calculation added steam to it.
However, the proximity of the former event to the earlier setting of MRR rate to 55 %, and the latter event to the earlier introduction of foreign currency indexed deposits into the FCLR calculation leaves open the possibility that coefficients in these models reflect the impact of deposit de-euroization on credit de-euroization instead.
As in the single equation case, in the re-euroization period 2008-2010, the reduction of the FCLR rate seems to have contributed to the speed of this process.
Thus, unlike single equation models, models DC1 and DC2 do not find any use for the changes made by the CNB to its MRR, CGR, and FCLR facilities in modeling financial euroization in Croatia.
Inclusion of foreign currency indexed deposits into the FCLR calculation appears highly significant only in the first two months of implementation when it had a strong negative impact on both deposit and credit euroization changes.