Economic and Financial Review


Central Bank of Nigeria


Dollarisation, Monetary Policy, Vector Autoregression


This paper examined the impact of dollarisation on monetary policy in Nigeria, using monthly data spanning 2002 to 2016. The paper adopted the conventional IMF proxy for dollarisation and traced its reactions to changing monetary policy stance. Using the vector autoregression (VAR) model and interbank rate as an indicator of monetary policy stance, the results showed that the size of dollarisation could influence the outcome of monetary policy, though the impact was small. This was evident from the output equations, that inflation did not respond in the first month and responded negatively in the second month. However, from the third to sixth month, it responded positively before it eventually returned to equilibrium. The overall impact of dollarisation on exchange rate is dependent on the degree of dollarisation. The conclusion from the results was that monetary policy could still be effective with the present level of dollarisation.

Author Bio

The author is a staff of the Research Department, Central Bank of Nigeria

Publication Title

CBN Economic and Financial Review





Recommended Citation

Adamu, Y. (2017). Unofficial Dollarisation and Monetary Policy in Nigeria. CBN Economic and Financial Review. 55(2), 69-86



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