## Financial De-Dollarization: A Global Perspective and the Peruvian Experience

_IMF Working Papers, April 26, 2016_

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## Bibliographic details
- Authors: Luis Catão, Marco Terrones
- Published: April 26, 2016
- Series: IMF Working Papers

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### Overview and Scope
- Publication title: Financial De-Dollarization: A Global Perspective and the Peruvian Experience
- Authors: Luis Catão, Marco Terrones
- Publication date: April 26, 2016
- Series: Working Paper No. 2016/097
- Volume: 2016; Issue: 097; Pages: 25
- ISBN: 9781484341377; ISSN: 1018-5941

### Key empirical findings (global)
- A broad global trend toward financial sector de-dollarization occurred from the early 2000s to the eve of the global financial crisis of 2008–09.
- Since the global financial crisis of 2008–09, de-dollarization has broadly stalled or even reversed in many economies.
- A subset of economies continued to de-dollarize after 2008–09, implying that domestic factors interact with global factors.
- The cross-country evidence exhibits striking heterogeneity of patterns across regions.

### The Peruvian experience (since the early 1990s)
- Peru provides insight into the interaction between domestic and global factors in de-dollarization.
- Factors identified as fostering de-dollarization in Peru:
  - Low global interest rates
  - Low global risk-aversion
  - High commodity prices
  - Domestic macro-prudential measures that raise the relative cost of domestic dollar loans
  - The introduction and adherence to inflation targeting

### Drivers and mechanisms
- Global drivers:
  - Movements in global interest rates
  - Changes in global risk-aversion
  - Commodity price dynamics
- Domestic drivers:
  - Macro-prudential policies affecting relative loan costs in domestic currency versus dollar loans
  - Monetary framework credibility—specifically, the introduction and adherence to inflation targeting

### Policy implications and recommendations (implicit in findings)
- Strengthen domestic macro-prudential frameworks to raise the relative cost of domestic dollar borrowing where de-dollarization is a policy objective.
- Maintain and adhere to credible inflation-targeting regimes to support de-dollarization.
- Monitor global financial conditions (global interest rates and global risk-aversion) and commodity price cycles as important external influences on domestic dollarization dynamics.
- Recognize heterogeneity across countries and regions; tailor policy mixes to domestic conditions and interactions with global factors.

*Source: IMF Working Paper “Financial De-Dollarization: A Global Perspective and the Peruvian Experience” by Luis Catão and Marco Terrones, April 26, 2016, Working Paper No. 2016/097, Pages: 25, ISBN: 9781484341377, ISSN: 1018-5941.*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/financial-de-dollarization-a-global-perspective-and-the-peruvian-experience-43877_