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.
Worth noting is that banks have been beefing up their provisioning for bad debts, with the NPL coverage ratio standing comfortably at 107.4 percent as of end-August. Despite the increase in loan-loss provisioning, banks stayed profitable as of end-June, with annualized net profit growing year-on-year by 1.8 percent. The BSP’s stress tests point to favorable banking system prospects amid risks.