Dollarization and De-dollarization: Formulation of Agenda

This policy paper deals with the phenomena of dollarization and prospects of de-dollarization policies in Belarus. During last two decades Belarus has been a highly dollarized economy. Recently, the authorities declared a campaign of de-dollarization, which, however, focuses mainly on de-dollarization of payments. Such a policy is unlikely to become effective. We show that Belarus suffers from all possible forms of dollarization that interact with each other, forming a kind of vicious circle. Through this, de-dollarization policies, if needed in general, must be systemic and consider different forms of dollarization. We show that strategically Belarus is situated in ‘boarder-line’ area between the options of autonomous monetary policy and official dollarization. If deferring to autonomous monetary policy, a sequence of systemic de-dollarization policies is crucial for its effectiveness. The mix of the policies depends on the scope of different forms of dollarization. However, there is no precise assessment for real dollarization in Belarus (which is the direction for future research). Hence, we formulate a number of scenarios of such policies for cases with different intensity of real dollarization.