Causes And Problems Of Dollarization

Author : Fabio Botta
Publisher : GRIN Verlag
ISBN 13 : 3346187918
Total Pages : 26 pages
Book Rating : 4.18/5 ( download)

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Download or read book Causes and Problems of Dollarization written by Fabio Botta and published by GRIN Verlag. This book was released on 2020-06-23 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2020 in the subject Economics - Foreign Trade Theory, Trade Policy, grade: 1,3, University of Leipzig (Institute for Economic Policy), course: Financial Development and Innovation in Developing Countries and Emerging Markets, language: English, abstract: This paper discusses the causes and problems associated with dollarization. Based on the results, it addresses the questions of how high dollarization rates can be evaluated and, in particular, whether it is advisable to opt for full dollarization (FD) or to what extent policymakers should rather aim for de-dollarization. As an introduction to the discussion, Chapter 2 will give a short illustration of the theoretical concepts of dollarization. Chapter 3 will then explain the causes of dollarization. The subsequent description of the advantages of FD in Chapter 4, which can also be cited as a reason for high rates of dollarization,3 leads directly to the problems associated with dollarization in Chapter 5. These problems arise – unless otherwise stated – both from high dollarization rates and from FD. The research up to Chapter 5 concentrates on a more theoretical level. The discussion on how to evaluate the causes and problems in Chapter 6 tries to link theoretical concepts with more general empirical analyses. Chapter 7 provides a brief conclusion of the most important findings and concludes with recommendations for future research. “Dollarization has evolved as one of the noteworthy features of globalization during the last two decades.” Although Mr. Yilmaz, the then Governor of the Central Bank of the Republic of Turkey, said this sentence at a conference on dollarization in December 2006, it remains more relevant than ever. Due to the increasing integration of the international financial system, the lifting of restrictions on capital mobility and the growing volume of trade, the debate on dollarization met with a growing interest in the 1990s. Nonetheless, today's economic journals are still filled with new publications on dollarization.

Author : Emre Ozsoz
Publisher : Walter de Gruyter GmbH & Co KG
ISBN 13 : 3110437023
Total Pages : 139 pages
Book Rating : 4.27/5 ( download)

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Download or read book Understanding Dollarization written by Emre Ozsoz and published by Walter de Gruyter GmbH & Co KG. This book was released on 2016-05-24 with total page 139 pages. Available in PDF, EPUB and Kindle. Book excerpt: A very commonly observed phenomenon in developing and emerging market economies is the use of another country’s currency (whether the US dollar or another currency) in lieu or in addition to the local currency. The most common type of this financial phenomenon is partial (de facto) dollarization where foreign currencies are used side by side with local currency for saving and borrowing purposes in addition to serving as medium of exchange. Governments in these countries have been encouraging dollarization for years by allowing their citizens to save and borrow from local banks in foreign currency. Yet the existence of multiple currencies on banks' balance sheets on both the asset and liability side poses risks to the health and stability of the banking system. This book evaluates the practical aspects of partial dollarization in countries such as Turkey, South Korea, Peru, and Cambodia among others. Starting with the origins of the phenomenon, the impact on banking systems and financial depth of the credit markets are discussed along with risks to the banking systems. Challenges faced by Central Banks and banking regulators are evaluated using recent country studies.

Author : Ms.Nombulelo Duma
Publisher : International Monetary Fund
ISBN 13 : 1455218936
Total Pages : 27 pages
Book Rating : 4.36/5 ( download)

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Download or read book Dollarization in Cambodia written by Ms.Nombulelo Duma and published by International Monetary Fund. This book was released on 2011-03-01 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: Over the past decade, Cambodia has become Asia’s most dollarized economy. In contrast, dollarization in neighboring Lao P.D.R., Mongolia, and Vietnam has been either declining or broadly stable. Somewhat paradoxically, growing dollarization in Cambodia has occurred against the backdrop of greater macroeconomic and political stability. The usual motive, currency substitution, does not appear to have been a factor. As the volume of dollars increased over the years, so has the volume of riel. A strong inward flow of dollars related to garments sector exports, tourism receipts, foreign direct investment, and aid, has benefitted the dollar based urban economy. The riel based rural economy has, however, lagged behind. Given international experience in de-dollarization, a carefully managed market based strategy, supported by a continued stable macroeconomic environment is essential for Cambodia’s de-dollarization.

Author : Mr.Mauro Mecagni
Publisher : International Monetary Fund
ISBN 13 : 1498368476
Total Pages : 75 pages
Book Rating : 4.76/5 ( download)

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Download or read book Dollarization in Sub-Saharan Africa written by Mr.Mauro Mecagni and published by International Monetary Fund. This book was released on 2015-05-15 with total page 75 pages. Available in PDF, EPUB and Kindle. Book excerpt: Dollarization—the use of foreign currencies as a medium of exchange, store of value, or unit of account—is a notable feature of financial development under macroeconomically fragile conditions. It has emerged as a key factor explaining vulnerabilities and currency crises, which have long been observed in Latin America, parts of Asia, and Eastern Europe. Dollarization is also present, prominently, in sub-Saharan Africa (SSA) where it remains significant and persistent at over 30 percent rates for both bank loans and deposits—although it has not increased significantly since 2001. However, progress in reducing dollarization has lagged behind other regions and, in this regard, it is legitimate to ask whether this phenomenon is an important concern in SSA. This study fills a gap in the literature by analyzing these issues with specific reference to the SSA region on the basis of the evidence for the past decade.

Author : Andrew Berg
Publisher : International Monetary Fund
ISBN 13 : 1451935048
Total Pages : 27 pages
Book Rating : 4.42/5 ( download)

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Download or read book Full Dollarization written by Andrew Berg and published by International Monetary Fund. This book was released on 2000 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: Analyzes the costs and benefits of full dollarization, or the adoption by one country of another country's currency. Potential advantages include lower borrowing costs and deeper integration into world markets. But countries lose the ability to devalue, and become dependent on the U.S. Compares with currency board option.

Author : Mr.Alain Ize
Publisher : International Monetary Fund
ISBN 13 : 1451844638
Total Pages : 49 pages
Book Rating : 4.34/5 ( download)

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Download or read book Dollarization of Financial Intermediation written by Mr.Alain Ize and published by International Monetary Fund. This book was released on 1998-03-01 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents a portfolio model of financial intermediation in which currency choice is determined by hedging decisions on both sides of a bank’s balance sheet. Minimum variance portfolio (MVP) allocations are found to provide a natural benchmark to estimate the scope for dollarization of bank deposits and loans as a function of macroeconomic uncertainty. Dollarization hysteresis is shown to occur when the expected volatility of the inflation rate is high in relation to that of the real exchange rate. The evidence shows that MVP dollarization generally approximates actual dollarization closely for a broad sample of countries, and policy implications are explored.

Author : Dominick Salvatore
Publisher : Oxford University Press, USA
ISBN 13 : 019515536X
Total Pages : 491 pages
Book Rating : 4.65/5 ( download)

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Download or read book The Dollarization Debate written by Dominick Salvatore and published by Oxford University Press, USA. This book was released on 2003 with total page 491 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book takes a global approach to one of today's most controversial topics in business: Dollarization. With the collapse of the former Soviet Union, and the formation of the Euro in Europe, many countries are debating whether or not a common currency is in their best interest. This intriguing volume brings together the leading participants in the current dollarization debates.

Author : Mr.Romain Veyrune
Publisher : International Monetary Fund
ISBN 13 : 1455202223
Total Pages : 52 pages
Book Rating : 4.25/5 ( download)

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Download or read book Dedollarization written by Mr.Romain Veyrune and published by International Monetary Fund. This book was released on 2010-08-01 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides a summary of the key policies that encourage dedollarization. It focuses on cases in which the authorities’ intention is to gain greater control of monetary policy and draws on the experiences of countries that have successfully dedollarized. Unlike previous work on the subject, this paper examines both macroeconomic stabilization policies and microeconomic measures, such as prudential regulation of the financial system. This study is also the first attempt to make extensive use of the foreign exchange regulation data reported in the IMF’s Annual Report on Exchange Arrangements and Exchange Restrictions. The main conclusion is that durable dedollarization depends on a credible disinflation plan and specific microeconomic measures.

Author : Eduardo Levy Yeyati
Publisher : MIT Press
ISBN 13 : 9780262122504
Total Pages : 364 pages
Book Rating : 4.02/5 ( download)

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Download or read book Dollarization written by Eduardo Levy Yeyati and published by MIT Press. This book was released on 2003 with total page 364 pages. Available in PDF, EPUB and Kindle. Book excerpt: Theoretical and empirical analysis of de jure dollarization. With the persistent instability of international financial markets, emerging economies are exploring new ways to reduce exposure to capital flow volatility. Some analysts argue that financially open economies are best served by more flexible regimes, while others argue in favor of extreme exchange rate regimes that have a strong commitment to a fixed parity or dispense with an independent currency. The successful launch of the euro has made more realistic the prospect of replacing a national currency with a strong foreign one. Recent examples include the adoption of the US dollar by Ecuador and El Salvador. The introduction of a foreign currency as sole legal tender, termed full (de jure) dollarization, has been the center of much political and academic debate. This book provides a comprehensive analysis of the issues from both theoretical and empirical perspectives. The topics discussed include the role of balance sheet effects, the linkage between currency risk and country risk, the impact of dollarization on trade, financial integration and credibility, the implications of dollarization for the lender of last resort, and the institutional and political economy aspects of dollarization.

Author : Mr.Geoffrey J Bannister
Publisher : International Monetary Fund
ISBN 13 : 1484373367
Total Pages : 39 pages
Book Rating : 4.61/5 ( download)

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Download or read book Dollarization and Financial Development written by Mr.Geoffrey J Bannister and published by International Monetary Fund. This book was released on 2018-09-11 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: Despite significant strides in financial development over the past decades, financial dollarization, as reflected in elevated shares of foreign currency deposits and credit in the banking system, remains common in developing economies. We study the impact of financial dollarization, differentiating across foreign currency deposits and credit on financial depth, access and efficiency for a large sample of emerging market and developing countries over the past two decades. Panel regressions estimated using system GMM show that deposit dollarization has a negative impact on financial deepening on average. This negative impact is dampened in cases with past periods of high inflation. There is also some evidence that dollarization hampers financial efficiency. The results suggest that policy efforts to reduce dollarization can spur faster and safer financial development.