Dollarization and Semi-Dollarization in Ecuador

Beckerman, Paul

World Bank, Washington, DC

关键词: BANK DEPOSITS;    BANK FAILURES;    BANK LOANS;    BANK PERFORMANCE;    BANK SAFETY;   

DOI  :  10.1596/1813-9450-2643
RP-ID  :  WPS2643

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Over the 1980s and 1990s, GDP growth hadstagnated because of oil export price volatility and naturaldisasters, the sacrifice of capital formation to heavyexternal public debt service, and incomplete and unevenstructural reform. The exchange rate depreciation thatproved continually necessary to sustain the net-exportsurplus and limit external debt accumulation inducedEcuadorians to dollarize spontaneously. The 1998 shocksaffected real economic activity--hence bank loan portfolios,and widened the fiscal and current acccount deficits. Theexternal imbalance led to exchange rate depreciation.Dollar-denominated bank loans whose borrowers lacked dollarincome increasingly turned non-performing. At the same time,the depreciation swelled the locla currency value of dollardeposit liabilities. Many depositors, fearing that banks hadbecome unsafe, withdrew, and over 1999 the Central Bank hadto provide banks massive liquidity support. By year'send, the resulting monetary issue led to the exchange ratecollapse and incipient hyperinflation that forced the moveto full dollarization. Ecuador's Central Bank willcontinue operating, using its foreign exchange holdings tocarry out limited liquidity management andlender-of-last-resort activities. Ecuador's publicaccounts and banking system remain vulnerable tocommodity-price and natural shocks. Exchange rate adjustmentand monetary expansion are no longer available, however, tomanage the external accounts, accommodate the publicdeficit, or assist failing banks. Further structural reformremains essential to assure fiscal discipline and bankingsystem safety.