Financial Dollarization

AGUSTIN CARSTENS Deputy Managing Director, International Monetary Fund, USA JORGE CAYAZZO Senior Financial Sector Expert, Monetary and Financial Systems Department, International Monetary Fund, USA ROBERTO CHANG Professor of Economics, Rutgers University and Research Associate, National Bureau of Economic Research, USA KEVIN COWAN Senior Economist, Central Bank of Chile, Chile OSCAR DANCOURT Acting Governor, Central Reserve Bank of Peru, Peru JULIO DE BRUN Director, Center for Banking and Financial Studies, Universidad ORT Uruguay and Executive Director, Private Banks Association, Uruguay AUGUSTO DE LA TORRE Senior Regional Financial Sector Advisor, Latin American and the Caribbean Regional Office, The World Bank, USA FRANCISCO DE PAULA GUTIERREZ Governor, Central Bank of Costa Rica, Costa Rica ANTONIO IGNACIO GARCIA PASCUAL Economist, Monetary and Financial Systems Department, International Monetary Fund, USA FRANCISCO GRIPPA Senior Economist, Monetary Division, Banco Central de Reserva del Perú, Peru EVA GUTIERREZ Economist, Policy Review Department, International Monetary Fund, USA DANIEL C. HARDY Deputy Division Chief, Monetary and Financial Systems Department, International Monetary Fund, USA LUIS OSCAR HERRERA Director, Financial Policy Department, Central Bank of Chile, Chile SOCORRO HEYSEN Deputy Division Chief, Monetary and Financial Systems Department, International Monetary Fund, USA ALLISON HOLLAND Debt Management Advisor, Monetary and FinancialSystems Department, International Monetary Fund, USA STEFAN INGVES Governor, Sveriges Riksbank, Sweden CLAUDIO IRIGOYEN Chief Economist, Central Reserve Bank of Argentina, Argentina OLIVER JEANNE Deputy Division Chief, Research Department, International Monetary Fund, USA MIGUEL KIGUEL Academic Advisor, Financial Stability Center and Professor Universidad Torcuato Di Tella, Argentina LEONARDO LEIDERMAN Professor, Berglas School of Economics, Tel Aviv University, Israel GERARDO LICANDRO Director, Research Department, Central Bank of Uruguay, Uruguay RODOLFO MAINO Senior Economist, Monetary and Financial Systems Department, International Monetary Fund, USA JUAN ANTONIO MORALES Governor, Central Bank of Bolivia, Bolivia CHRISTIAN MULDER Deputy Division Chief, Monetary and Financial Systems Department, International Monetary Fund, USA MASAHIRO NOZAKI Economist, Western Hemisphere Department, International Monetary Fund, USA ERIC PARRADO Advisor of the Financial Policy Division, Central Bank of Chile, Chile CEYLA PAZARBASIOGLU Division Chief, International Capital Markets Department, International Monetary Fund, USA ROBERT RENNHACK Division Chief, Western Hemisphere Department, International Monetary Fund, USA MARKUS RODLAUER Senior Advisor, Western Hemisphere Department, International Monetary Fund, USA RENZO ROSSINI General Manager, Central Reserve Bank of Peru, Peru KLAUS SCHMIDT-HEBBEL Chief of Economic Research, Central Bank of Chile and Professor, Catholic University of Chile, Chile PHILIP TURNER Head of the Secretariat Group, Monetary and Economic Department, Bank for International Settlements, Switzerland

Preface; O.Dancourt & S.Ingves Introduction; A.Armas, A.Ize & E.Levy-Yeyati PART I: FINANCIAL DOLLARIZATION: ROOTS AND DYNAMICS Financial Dollarization Equalibria: A Framework for Policy Analysis; A.Ize Comments on Chapter 2; O.Jeanne Financial De-dollarization: Is it for Real? A.Ize & E.Levy-Yeyati Comments on Chapter 3; R.Chang Financial Dollarization in Latin America; R.Rennhack & M.Nozaki Comments on Chapter 4; K.Cowan PART II: MONETARY AND EXCHANGE RATE MANAGEMENT Exchange Rate and Monetary Management in a Partially Dollarized Economy; L.Leiderman, R.Maino & E.Parrado Targeting Inflation in a Dollarized Economy: The Peruvian Experience; A.Armas & F.Grippa Discussants; K.Schmidt-Hebbel PART III: PRUDENTIAL MANAGEMENT Controlling Currency Mismatches in Emerging Economies; P.Turner Prudential Management in a Partially Dollarized Economy: Toward Internationally Accepted Best Practices; J.Cayazzo, A.I.G.Pascual, E.Gutierrez & S.Heysen Managing Systematic Liquidity Risk in a Dollarized Economy; A.Ize, M.Kiguel & E.Levy-Yeyati To Hell and Back: Crisis Management in a Dollarized Economy: The Case of Uruguay; J.de Brun & G.Licandro Discussant; P.Turner PART IV: PROMOTING THE LOCAL CURRENCY Can Indexed Debt Absolve Original Sin? Going Indexed or is Self-Flagellation Needed? A.Holland & C.Mulder De-dollarizing: The Gentle Way or the Hard Way? D.C.Hardy & C.Pazarbasioglu Discussants; A.de La Torre, L.Oscar Herrera & C.Irigoyen PART V: THE ROUTE AHEAD Summary of Round Table Discussion; A.Carstens, F.de Paula Gutierrez, L.Leiderman, J.A.Morales, M.Rodlauer & R.Rossini