Dollarization in Latin America: Recent Evidence and Some Policy Issues

January 1, 1996

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper examines the pattern of dollarization in Latin America, focusing on the experience of five countries (Argentina, Bolivia, Mexico, Peru and Uruguay) during 1970-1993. It presents evidence on the relative size of dollarization, the allocation of foreign currency deposits, and the behavior of money velocity. The discussion stresses the role of institutional factors, macroeconomic conditions, and the dynamics of money demand In shaping the dollarization process; it also highlights the shortcomings of indicators frequently employed to analyze the phenomenon. The paper provides a brief critical assessment of the empirical literature on dollarization, and identifies areas where further research seems warranted.

Subject: Bank deposits, Commercial banks, Currencies, Dollarization, Financial institutions, Financial services, Inflation, Monetary policy, Money, Prices

Keywords: Bank deposits, Commercial banks, Currencies, Dollarization, dollarization experience, dollarization indicator, dollarization process, dollarization ratio, foreign currency, Inflation, pattern of dollarization, WP

Pages:
19
Volume:
1996
DOI:
https://doi.org/10.5089/9781451841992.001
Issue:
004
Series:
Working Paper No. 1996/004
Stock No:
WPIEA0041996
ISBN:
9781451841992
ISSN:
1018-5941

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