For a long time it seemed that the extent of asset and liability dollarization was impervious to improved economic performance. That was certainly the impression one had looking at Latin American developments, where for instance Bolivia stabilized from hyperinflation in the mid-1980s, but the banking system continued to be over 80 percent dollarized into the present century.
Now however we have several examples of countries that have dedollarized successfully on the asset and liability sides, including Israel, Poland, Mexico, Egypt, and Turkey. And some signs of declining dollarization are evident in Latin American countries where it seemed that dollarization was impossible to reverse. Could legal restrictions on dollarization speed up the process of dedollarization? Effectively implemented, they could.