{
  "title": "Currency Substitution: The Recent Experience of Bolivia",
  "publication": "IMF Working Papers, August 1, 1992",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/30/currency-substitution-the-recent-experience-of-bolivia-815",
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  "summary": "This paper analyzes the determinants of currency substitution in Bolivia in the period following the 1984/85 hyperinflation.",
  "sections": [
    {
      "heading": "Summary and main finding",
      "content": "- This paper analyzes the determinants of currency substitution in Bolivia in the period following the 1984/85 hyperinflation.\n- Expected exchange rate depreciation and actual interest rate differentials between boliviano and dollar deposits in the Bolivian banking system are statistically significant determinants of the degree of currency substitution.\n- The explanatory power of these variables is low compared to variables that measure the degree of inertia in the currency substitution process.\n- Thus, further reductions in inflation or higher interest rates for boliviano bank deposits are likely to have but a small effect on dollarization."
    },
    {
      "heading": "Determinants and analytical emphasis",
      "content": "- Statistically significant determinants identified:\n  - Expected exchange rate depreciation\n  - Actual interest rate differentials between boliviano and dollar deposits in the Bolivian banking system\n- Dominant explanatory factor:\n  - Variables measuring the degree of inertia in the currency substitution (dollarization) process have greater explanatory power than the two statistically significant variables above."
    },
    {
      "heading": "Policy implications and projection",
      "content": "- Policy actions evaluated:\n  - Further reductions in inflation\n  - Higher interest rates for boliviano bank deposits\n- Likely outcome:\n  - Both measures are likely to have only a small effect on reducing dollarization given the strong inertia observed in the currency substitution process."
    },
    {
      "heading": "Publication and metadata",
      "content": "- Authors: Benedict J. Clements, Gerd Schwartz\n- Date: August 1, 1992\n- Pages: 32\n- Volume: 1992\n- Issue: 065\n- Series: Working Paper No. 1992/065\n- DOI: https://doi.org/10.5089/9781451848618.001\n- Stock No: WPIEA0651992\n- ISBN: 9781451848618\n- ISSN: 1018-5941"
    },
    {
      "heading": "Subjects and keywords",
      "content": "- Subject: Bank deposits, Currencies, Dollarization, Exchange rates, Financial services, Foreign exchange, Inflation, Monetary policy, Money, Prices\n- Keywords: Bank deposits, Bolivia, Bolivia foreign currency deposit, Currencies, dollar, dollar deposit, dollar-denominated asset, Dollarization, dollarization process, exchange rate, Exchange rates, foreign currency, Inflation, money balance, quasi money deposit, quasi-money deposit, U.S. dollar, WP, yield\n\nCurrency Substitution: The Recent Experience of Bolivia — Benedict J. Clements, Gerd Schwartz; IMF Working Papers; August 1, 1992.\n\n---\n\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/currency-substitution-the-recent-experience-of-bolivia-815"
    }
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    "Authors: Benedict J. Clements, Gerd Schwartz",
    "Published: August 1, 1992",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451848618.001",
    "This paper analyzes the determinants of currency substitution in Bolivia in the period following the 1984/85 hyperinflation.",
    "Expected exchange rate depreciation and actual interest rate differentials between boliviano and dollar deposits in the Bolivian banking system are statistically significant determinants of the degree of currency substitution.",
    "The explanatory power of these variables is low compared to variables that measure the degree of inertia in the currency substitution process.",
    "Thus, further reductions in inflation or higher interest rates for boliviano bank deposits are likely to have but a small effect on dollarization.",
    "Statistically significant determinants identified:",
    "Dominant explanatory factor:",
    "Policy actions evaluated:",
    "Likely outcome:",
    "Authors: Benedict J. Clements, Gerd Schwartz",
    "Date: August 1, 1992",
    "Pages: 32",
    "Volume: 1992",
    "Issue: 065",
    "Series: Working Paper No. 1992/065",
    "DOI: https://doi.org/10.5089/9781451848618.001",
    "Stock No: WPIEA0651992",
    "ISBN: 9781451848618",
    "ISSN: 1018-5941",
    "Subject: Bank deposits, Currencies, Dollarization, Exchange rates, Financial services, Foreign exchange, Inflation, Monetary policy, Money, Prices",
    "Keywords: Bank deposits, Bolivia, Bolivia foreign currency deposit, Currencies, dollar, dollar deposit, dollar-denominated asset, Dollarization, dollarization process, exchange rate, Exchange rates, foreign currency, Inflation, money balance, quasi money deposit, quasi-money deposit, U.S. dollar, WP, yield"
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