The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
We re-appraise the cross-country evidence on the dollarization of financial systems in
emerging market economies. Amidst striking heterogeneity of patterns across regions, we
identify a broad global trend towards financial sector de-dollarization from the early 2000s to
the eve of the global financial crisis of 2008-09. Since then, de-dollarization has broadly
stalled or even reversed in many economies. Yet a few of them have continued to de-dollarize.
This suggests that domestic factors are also important and interact with global factors. To gain
insight into such an interaction, we examine the experience of Peru since the early 1990s and
find that low global interest rates, low global risk-aversion, and high commodity prices have
fostered de-dollarization. Domestic macro-prudential measures that raise the relative cost of
domestic dollar loans and the introduction and adherence to inflation targeting have also been