Bolivianization, basic causes and propagation mechanisms in the rescue of monetary sovereignty

Abstract

On November 10, 2019, a coup d'etat took place in Bolivia imposing a de facto government based on military and police command that threatens the continuity of an economic model that began in 2006 and is attributed 14 years of a sovereign state and economically strong that recovered monetary sovereignty for that country. Until 2005 Bolivia was an economy with de facto dollarization: the dollar was used in Bolivia as a unit of account, store of value and medium of exchange. During the 1980s and 1990s, financial dollarization levels reached 80% and 90% for deposits and credits, respectively. Condition that remained until the middle of the first decade of the 21st century. Bolivia was one of the most dollarized countries in the world. Since 2006, a series of policies were implemented aimed at creating mechanisms that promoted greater use of the national currency, positively impacting the recovery of the functions of the Bolivian peso. Bolivianization (de-dollarization) is defined as the gradual, gradual and long-term process through which the national currency recovers to a greater extent the conventional functions of money, the foregoing as the basic cause to rescue monetary sovereignty, while the propagation mechanisms They are found in the behavior of credits and deposits.