Money and Credit Under Currency Substitution
AbstractThis paper examines the effects of a repatriation of foreign assets in an economy subject to currency substitution. In the absence of 100 percent reserve requirements, a change in the location of deposits that is not compensated by an increase in money demand induces a credit boom that works itself out through a transitory current account deficit and real currency appreciation. These results are illustrated with data from recent experiences in Argentina and Peru, where local banks have been authorized to capture dollar deposits from residents.
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Bibliographic InfoArticle provided by Palgrave Macmillan in its journal Staff Papers - International Monetary Fund.
Volume (Year): 40 (1993)
Issue (Month): 2 (June)
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Web page: http://www.palgrave-journals.com/
Postal: Palgrave Macmillan Journals, Subscription Department, Houndmills, Basingstoke, Hampshire RG21 6XS, UK
Find related papers by JEL classification:
- E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
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- Eugenio Diaz Bonilla & Hector E. Schamis, 1999. "La economía política de las políticas de cambio en Argentina," Research Department Publications 3079, Inter-American Development Bank, Research Department.
- Eugenio Diaz Bonilla & Hector E. Schamis, 1999. "The Political Economy of Exchange Rate Policies in Argentina," Research Department Publications 3078, Inter-American Development Bank, Research Department.
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