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Financial dollarization and dedollarization

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dc.description.abstract Financial dollarization is a key factor behind systemic financial fragility in Latin America. The experience shows that dedollarization can be achieved but can just as easily be missed, and worse: blunt dedollarization measures that repress dollarization may easily fail to solve fragility and, instead, foster risky short-term debt or provoke massive financial disintermediation and crisis. This paper analyzes the sources of liability dollarization in a portfolio framework and identifies the failures leading to excessive dollarization that merit policy intervention as well as the reasons why dedollarization policy often goes awry. It then derives an analytically sound, multipronged domestic dedollarization program that takes into account the risks of misdiagnosis and the experiences, both successful and failed. This program centers around the development of good local currency substitutes for dollar debt, such as CPI-indexed debt, rather than the repression of dollar debt. en
dc.title Financial dollarization and dedollarization en
dc.contributor.author Fernández-Arias, Eduardo
dc.date.accessioned 2014-11-17T02:38:21Z
dc.date.available 2014-11-17T02:38:21Z
dc.date.issued 2006-03
dc.identifier.issn 1529-7470
dc.identifier.uri http://hdl.handle.net/123456789/48746
lacea.language.supported en
dc.contributor.other Comments by Eduardo Levy Yeyati and Eduardo Morón
dc.language.iso en
dc.publisher Brookings Institution Press
dc.subject Interest rates
dc.subject Macroeconomics
dc.subject Central banking
dc.subject Monetary policy
dc.type Article


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