“Good-Bye” to the U.S. Dollar? Financial De-Dollarization in Latin America

Dollarization has been a feature of banking systems of many Latin American countries. Financial dollarization—the process in which a large share of residents’ assets and liabilities are denominated in U.S. dollars—has been a distinguishing feature of the banking sector of many countries in Latin America, making it one of the most dollarized regions in the world.  Although it was largely a consequence of past episodes of severe economic crises and high inflation, financial dollarization has remained stubbornly high even after a prolonged period of economic stability and low inflation.