The Finance Minister reiterated that the dollarization
of the economy will not be allowed and SBP, in its role of regulator, will take all necessary measures to curb such activities.
Also, the level of dollarization
of deposits remains high.
Suresh Jain, CFO, Essar Oil said, Financials for the quarter were impacted on account of decline in cracks of key products and weakness in oil prices which is partly offset by operational efficiency and reduction in interest and financial charges due to part dollarization
of our debt.
The use of parallel currencies creates a system that is not dollarization
since electronic money is a distinct currency that can multiply or be issued without having enough fluid backing in the Central Bank (NotiSur, Sept.
6 percent, slightly driving up the deposit dollarization
ratio from 63.
The study makes recommendations on areas such as boosting medium and long-term growth prospects, reduction of debt levels, dollarization
as an alternative framework for monetary policy, and evaluation of compliance with international best practices in bank supervision.
This phenomenon, which is also referred to as credit dollarization
or credit euroization, (2) however, exposes the financial system to a number of additional risk factors (Bordo et al.
This issue is not new; in the last decade a few Latin American countries, the most dollarized region in the world, began introducing measures to create incentives to internalize the risks of dollarization
, the development of capital markets in local currencies, and de-dollarization
of deposits, which all contribute to a decline in credit dollarization
globally, but predominantly in Latin America and the BRIC (Brazil, Russia, India and China) countries.
The Central Bank is still financing the public debt but this procedure can't continue forever and for this reason we must find a solution so that the dollarization
ratio drops and this would secure liquidity in the market.
It shows how dollarization
has allowed Zimbabwe to quash hyperinflation, restore stability, increase budgetary discipline, and reestablish monetary credibility.
A nearly 1,000 basis point increase in administratively set interest rates throughout the year helped take some heat off of the recent resurgence of dollarization
in the economy.
I don't understand why the government is allowing dollarization
of the economy," wonders, Lual Deng Kuol, a student of economics and social studies, noting that excessive use of the dollar was exerting unnecessary pressure on the local currency.