{
  "title": "Peru: Drivers of De-dollarization",
  "publication": "IMF Working Papers, July 1, 2010",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/peru-drivers-of-de-dollarization-24059",
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  "summary": "Peru has successfully pursued a market-driven financial de-dollarization during the last decade. Dollarization of credit and deposit of commercial banks - across all sectors and maturities - has declined, with larger declines for commercial credit and time and saving deposits.",
  "sections": [
    {
      "heading": "Summary and key findings",
      "content": "- Peru has pursued a market-driven financial de-dollarization during the last decade.\n- Dollarization of credit and deposit of commercial banks—across all sectors and maturities—has declined.\n- Larger declines occurred for commercial credit and time and saving deposits.\n- The paper’s analysis confirms that de-dollarization has been driven by:\n  - macroeconomic stability;\n  - introduction of prudential policies to better reflect currency risk (such as the management of reserve requirements);\n  - development of the capital market in soles."
    },
    {
      "heading": "Drivers of de-dollarization (analysis)",
      "content": "- Macroeconomic stability:\n  - Identified as a primary driver enabling reduced reliance on foreign currency in the financial system.\n- Prudential policies:\n  - Introduction of measures that better reflect currency risk, including management of reserve requirements, contributed to de-dollarization.\n- Capital market development in soles:\n  - Development of domestic-currency capital markets supported substitution away from dollar-denominated instruments."
    },
    {
      "heading": "Policy recommendations and further steps",
      "content": "- Given consolidated macroeconomic stability, greater exchange rate flexibility could foster further de-dollarization.\n- Additional prudential measures could further discourage banks’ lending and funding in foreign currency.\n- Further capital market development in domestic currency (soles) would help overall financial de-dollarization.\n- Further de-dollarization efforts could focus on the three fronts identified: macroeconomic stability, prudential policy, and capital market development.\n\n---\n\n Content in this bundle\n\n- wp10169\n  - wp10169 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp10169 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/peru-drivers-of-de-dollarization-24059"
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    "Authors: Mercedes Garcia-Escribano",
    "Published: July 1, 2010",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781455201808.001",
    "Peru has pursued a market-driven financial de-dollarization during the last decade.",
    "Dollarization of credit and deposit of commercial banks—across all sectors and maturities—has declined.",
    "Larger declines occurred for commercial credit and time and saving deposits.",
    "The paper’s analysis confirms that de-dollarization has been driven by:",
    "Macroeconomic stability:",
    "Prudential policies:",
    "Capital market development in soles:",
    "Given consolidated macroeconomic stability, greater exchange rate flexibility could foster further de-dollarization.",
    "Additional prudential measures could further discourage banks’ lending and funding in foreign currency.",
    "Further capital market development in domestic currency (soles) would help overall financial de-dollarization.",
    "Further de-dollarization efforts could focus on the three fronts identified: macroeconomic stability, prudential policy, and capital market development.",
    "**_wp10169**"
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