Taming Financial Dollarization: Determinants and Effective Policies – The Case of Uruguay

Taming Financial Dollarization: Determinants and Effective Policies – The Case of Uruguay
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Volume/Issue: Volume 2023 Issue 244
Publication date: November 2023
ISBN: 9798400258428
$20.00
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Topics covered in this book

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Inflation , Economics- Macroeconomics , Money and Monetary Policy , Economics / General , Dollarization , Prudential Policies , Monetary Policy , Uruguay , Peru , , deposit dollarization , dollarization trend , credit repo , financial dollarization , dollarization level , Inflation , Reserve requirements , Exchange rates , Currencies , Global , South America , Caribbean , Western Hemisphere

Summary

With some of the most significant levels of financial dollarization in the Western Hemisphere, Uruguay is characterized by extensive dollarization in both deposits and loans. While traditional factors like high inflation and substantial devaluations have been associated with such outcome, the enduring nature of dollarization in Uruguay also underscores the importance of structural elements. In formulating a holistic strategy to reduce dollarization, not only should there be an enhancement of the monetary policy framework aimed at maintaining low, stable inflation, but it should also consider the calibration of prudential policies such as currency-differentiated reserve requirements and foreign-currency credit repos.