III Managing Bank Runs in Dollarized Countries
Author:
Ms. Anne Marie Gulde
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,
Mr. David S. Hoelscher
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Mr. Alain Ize
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Mr. Dewitt D Marston
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Mr. Gianni De Nicolo
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Language:
English
Print Publication Date:
15 Jun 2004
Keywords:
OP; currency; dollar; deposit; market reform; deposit maturity; liquidity support; depositor confidence; Securitizing deposit; liquidity provision; Liquidity; Currencies; Commercial banks; Blanket guarantee; Bank deposits

Abstract

Dealing with bank runs in dollarized economies is both more difficult and subject to greater risks than in other cases.16 The absence of a lender of last resort has a potential to make dollarized systems more prone to runs, and runs more difficult to stop when they occur. A strategy to address runs cannot rely to the same extent on the provision of liquidity and on deposit guarantees, the two key elements identified for other cases. The additional constraints call for more attention to financial sector soundness. In the cases where, in spite of such added vigilance, bank runs do occur, theory and country experiences suggest that the authorities may need to resort earlier and more frequently to administrative measures that restrict the availability of deposits, or else seek international support on a larger scale (Table 5).

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Cover Financial Stability in Dollarized Economies
Financial Stability in Dollarized Economies
ISBN:
9781589062962
ISSN:
0251-6365
Publication Date:
15 Jun 2004
Publisher:
International Monetary Fund
DOI:
https://doi.org/10.5089/9781589062962.084
Pages:
35

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