Dollarization and Exchange Rate Fluctuations
Although the worldwide growth in dollarization of bank deposits has recently slowed, it has already reached very high levels in dozens of countries. Building on earlier findings that allowed the main cross-country variations in the share of dollars...
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| Format: | Policy Research Working Paper |
| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2007/03/7459553/dollarization-exchange-rate-fluctuations http://hdl.handle.net/10986/7252 |
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okr-10986-72522021-04-23T14:02:33Z Dollarization and Exchange Rate Fluctuations Honohan, Patrick BANK DEPOSITS BANK INTEREST RATES BANKING CRISES BANKING SYSTEM BANKING SYSTEMS CDS CENTRAL BANK CENTRAL BANK INDEPENDENCE CENTRAL BANKS COUNTRY VARIATION COUNTRY VARIATIONS CREDIT RISK CURRENCY BOARD CURRENCY CRISIS CURRENCY DEPRECIATION CURRENCY OF DENOMINATION CURRENCY RISK CURRENCY UNITS DEPOSIT DOLLARIZATION DEPOSIT INTEREST DEPOSIT INTEREST RATES DEPOSIT MONEY DEPOSIT MONEY BANKS DEPOSIT RATES DEPRECIATION DOES DISINFLATION DOLLAR DEPOSITS DOLLARIZATION RATIOS DOMESTIC CURRENCY EAST EUROPEAN ELASTICITY EURO EXCHANGE ARRANGEMENTS EXCHANGE CONTROLS EXCHANGE RATE EXCHANGE RATE CHANGES EXCHANGE RATE CRISES EXCHANGE RATE DEPRECIATION EXCHANGE RATE PEG EXCHANGE RATE POLICY EXCHANGE RATE REGIME EXCHANGE RATES EXCHANGE RESTRICTIONS FINANCIAL STABILITY FINANCIAL SYSTEMS FOREIGN CURRENCY FOREIGN CURRENCY DEPOSITS FOREIGN CURRENCY HOLDINGS FOREIGN CURRENCY LIABILITIES FOREIGN EXCHANGE FOREIGN EXCHANGE RISK FOREIGN INVESTMENTS GDP HIGH INFLATION HIGH RATES INDIRECT EFFECTS INFLATION INFLATION RATE INFLATION RATES INHERITANCE INSTITUTIONAL DEVELOPMENT INTEREST RATE INTEREST RATES INTERNATIONAL TRADE LEBANESE POUND LEGAL SYSTEM LENDER OF LAST RESORT LIQUID ASSETS LIQUIDITY LIQUIDITY CRISES LOCAL BANKING SYSTEM LOCAL BORROWERS LOCAL CURRENCY M2 MACROECONOMIC ENVIRONMENT MARKET RISK MONETARY AUTHORITIES MONETARY EXPANSION MONETARY POLICY MONETARY SHOCKS MONEY BASE NATIONAL AUTHORITIES NOMINAL EXCHANGE RATES NOMINAL RATES NORMAL VOLATILITY OFFSHORE BANKING OPTIMIZATION PEGS POLICY CREDIBILITY POLICY OPTIONS POLICY RESEARCH PORTFOLIO RISK PREMIUM SEIGNIORAGE SOLVENCY STABILIZATION STANDARD DEVIATION SYSTEMIC RISK TRANSITION ECONOMIES VALUATION YEMEN Although the worldwide growth in dollarization of bank deposits has recently slowed, it has already reached very high levels in dozens of countries. Building on earlier findings that allowed the main cross-country variations in the share of dollars to be explained in terms of national policies and institutions, this paper turns to analysis of short-run variations, particularly the response of dollarization to exchange rate changes, which is shown to be too small to warrant "fear of floating" by dollarized economies. But high dollarization is shown to increase the risk of depreciation and even suspension, as indicated by interest rate spreads. While specific policy is needed to deal with the risks associated with dollarization, the underlying causes of unwanted dollarization should also be tackled. 2012-06-06T15:45:10Z 2012-06-06T15:45:10Z 2007-03 http://documents.worldbank.org/curated/en/2007/03/7459553/dollarization-exchange-rate-fluctuations http://hdl.handle.net/10986/7252 English Policy Research Working Paper; No. 4172 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
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Digital Repository |
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Foreign Institution |
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Digital Repositories |
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World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
BANK DEPOSITS BANK INTEREST RATES BANKING CRISES BANKING SYSTEM BANKING SYSTEMS CDS CENTRAL BANK CENTRAL BANK INDEPENDENCE CENTRAL BANKS COUNTRY VARIATION COUNTRY VARIATIONS CREDIT RISK CURRENCY BOARD CURRENCY CRISIS CURRENCY DEPRECIATION CURRENCY OF DENOMINATION CURRENCY RISK CURRENCY UNITS DEPOSIT DOLLARIZATION DEPOSIT INTEREST DEPOSIT INTEREST RATES DEPOSIT MONEY DEPOSIT MONEY BANKS DEPOSIT RATES DEPRECIATION DOES DISINFLATION DOLLAR DEPOSITS DOLLARIZATION RATIOS DOMESTIC CURRENCY EAST EUROPEAN ELASTICITY EURO EXCHANGE ARRANGEMENTS EXCHANGE CONTROLS EXCHANGE RATE EXCHANGE RATE CHANGES EXCHANGE RATE CRISES EXCHANGE RATE DEPRECIATION EXCHANGE RATE PEG EXCHANGE RATE POLICY EXCHANGE RATE REGIME EXCHANGE RATES EXCHANGE RESTRICTIONS FINANCIAL STABILITY FINANCIAL SYSTEMS FOREIGN CURRENCY FOREIGN CURRENCY DEPOSITS FOREIGN CURRENCY HOLDINGS FOREIGN CURRENCY LIABILITIES FOREIGN EXCHANGE FOREIGN EXCHANGE RISK FOREIGN INVESTMENTS GDP HIGH INFLATION HIGH RATES INDIRECT EFFECTS INFLATION INFLATION RATE INFLATION RATES INHERITANCE INSTITUTIONAL DEVELOPMENT INTEREST RATE INTEREST RATES INTERNATIONAL TRADE LEBANESE POUND LEGAL SYSTEM LENDER OF LAST RESORT LIQUID ASSETS LIQUIDITY LIQUIDITY CRISES LOCAL BANKING SYSTEM LOCAL BORROWERS LOCAL CURRENCY M2 MACROECONOMIC ENVIRONMENT MARKET RISK MONETARY AUTHORITIES MONETARY EXPANSION MONETARY POLICY MONETARY SHOCKS MONEY BASE NATIONAL AUTHORITIES NOMINAL EXCHANGE RATES NOMINAL RATES NORMAL VOLATILITY OFFSHORE BANKING OPTIMIZATION PEGS POLICY CREDIBILITY POLICY OPTIONS POLICY RESEARCH PORTFOLIO RISK PREMIUM SEIGNIORAGE SOLVENCY STABILIZATION STANDARD DEVIATION SYSTEMIC RISK TRANSITION ECONOMIES VALUATION YEMEN |
| spellingShingle |
BANK DEPOSITS BANK INTEREST RATES BANKING CRISES BANKING SYSTEM BANKING SYSTEMS CDS CENTRAL BANK CENTRAL BANK INDEPENDENCE CENTRAL BANKS COUNTRY VARIATION COUNTRY VARIATIONS CREDIT RISK CURRENCY BOARD CURRENCY CRISIS CURRENCY DEPRECIATION CURRENCY OF DENOMINATION CURRENCY RISK CURRENCY UNITS DEPOSIT DOLLARIZATION DEPOSIT INTEREST DEPOSIT INTEREST RATES DEPOSIT MONEY DEPOSIT MONEY BANKS DEPOSIT RATES DEPRECIATION DOES DISINFLATION DOLLAR DEPOSITS DOLLARIZATION RATIOS DOMESTIC CURRENCY EAST EUROPEAN ELASTICITY EURO EXCHANGE ARRANGEMENTS EXCHANGE CONTROLS EXCHANGE RATE EXCHANGE RATE CHANGES EXCHANGE RATE CRISES EXCHANGE RATE DEPRECIATION EXCHANGE RATE PEG EXCHANGE RATE POLICY EXCHANGE RATE REGIME EXCHANGE RATES EXCHANGE RESTRICTIONS FINANCIAL STABILITY FINANCIAL SYSTEMS FOREIGN CURRENCY FOREIGN CURRENCY DEPOSITS FOREIGN CURRENCY HOLDINGS FOREIGN CURRENCY LIABILITIES FOREIGN EXCHANGE FOREIGN EXCHANGE RISK FOREIGN INVESTMENTS GDP HIGH INFLATION HIGH RATES INDIRECT EFFECTS INFLATION INFLATION RATE INFLATION RATES INHERITANCE INSTITUTIONAL DEVELOPMENT INTEREST RATE INTEREST RATES INTERNATIONAL TRADE LEBANESE POUND LEGAL SYSTEM LENDER OF LAST RESORT LIQUID ASSETS LIQUIDITY LIQUIDITY CRISES LOCAL BANKING SYSTEM LOCAL BORROWERS LOCAL CURRENCY M2 MACROECONOMIC ENVIRONMENT MARKET RISK MONETARY AUTHORITIES MONETARY EXPANSION MONETARY POLICY MONETARY SHOCKS MONEY BASE NATIONAL AUTHORITIES NOMINAL EXCHANGE RATES NOMINAL RATES NORMAL VOLATILITY OFFSHORE BANKING OPTIMIZATION PEGS POLICY CREDIBILITY POLICY OPTIONS POLICY RESEARCH PORTFOLIO RISK PREMIUM SEIGNIORAGE SOLVENCY STABILIZATION STANDARD DEVIATION SYSTEMIC RISK TRANSITION ECONOMIES VALUATION YEMEN Honohan, Patrick Dollarization and Exchange Rate Fluctuations |
| relation |
Policy Research Working Paper; No. 4172 |
| description |
Although the worldwide growth in
dollarization of bank deposits has recently slowed, it has
already reached very high levels in dozens of countries.
Building on earlier findings that allowed the main
cross-country variations in the share of dollars to be
explained in terms of national policies and institutions,
this paper turns to analysis of short-run variations,
particularly the response of dollarization to exchange rate
changes, which is shown to be too small to warrant
"fear of floating" by dollarized economies. But
high dollarization is shown to increase the risk of
depreciation and even suspension, as indicated by interest
rate spreads. While specific policy is needed to deal with
the risks associated with dollarization, the underlying
causes of unwanted dollarization should also be tackled. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Honohan, Patrick |
| author_facet |
Honohan, Patrick |
| author_sort |
Honohan, Patrick |
| title |
Dollarization and Exchange Rate Fluctuations |
| title_short |
Dollarization and Exchange Rate Fluctuations |
| title_full |
Dollarization and Exchange Rate Fluctuations |
| title_fullStr |
Dollarization and Exchange Rate Fluctuations |
| title_full_unstemmed |
Dollarization and Exchange Rate Fluctuations |
| title_sort |
dollarization and exchange rate fluctuations |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/2007/03/7459553/dollarization-exchange-rate-fluctuations http://hdl.handle.net/10986/7252 |
| _version_ |
1764401691696824320 |