Zambia’s decision to implement de-dollarisation—reducing reliance on the US dollar in domestic transactions—marks a bold move to stabilize the kwacha and strengthen the efficacy of its monetary policy. Critics often cite failed attempts in countries like Venezuela and Zimbabwe, but these critiques overlook deeper economic contexts and policy missteps. By adopting a structured, gradual approach and learning from global experiences, Zambia has a unique opportunity to avoid similar challenges and successfully de-dollarise.
What point are you making by that limited time series at the top of the page? Are these movements momentum trades, are these related to international trades in commodities eg oil purchases, are they related to kwacha movements or speculation?
The BOZ's readily available data on commercial bank deposit liabilities, sourced from the fortnightly statistics (link above), dates back to January 2014. For this article, I chose to use FCY deposits as a percentage of GDP to depict dollarization, as an alternative to the conventional approach, which typically compares FCY deposits to LCY deposits. The intention was to offer a different perspective, adding variety to the representation. While this may not necessarily be more fitting, it complements the broader analysis. I’ve covered related dollarization elements, including trends and key events, in previous publications, and I sought to avoid repeating those points here.
What point are you making by that limited time series at the top of the page? Are these movements momentum trades, are these related to international trades in commodities eg oil purchases, are they related to kwacha movements or speculation?
It presents FCY deposits in the banking system as a percentage of GDP, rather than the standard presentation of the FCY deposit to LCY deposit ratio.
That's clear but you don't explore the implications in your post. Also does it vary with a longer time series? And what accounts for the trend data?
https://www.boz.zm/monetary-and-financial-statistics-Dec2022.htm
The BOZ's readily available data on commercial bank deposit liabilities, sourced from the fortnightly statistics (link above), dates back to January 2014. For this article, I chose to use FCY deposits as a percentage of GDP to depict dollarization, as an alternative to the conventional approach, which typically compares FCY deposits to LCY deposits. The intention was to offer a different perspective, adding variety to the representation. While this may not necessarily be more fitting, it complements the broader analysis. I’ve covered related dollarization elements, including trends and key events, in previous publications, and I sought to avoid repeating those points here.