Uruguay is pushing forward with a multi-faceted strategy to reduce its reliance on the U.S. dollar and strengthen the role of the Uruguayan peso within its economy. Finance Minister Gabriel Oddone stated that the country aims to issue 50% of its debt in pesos in the near future, citing strong investor demand and a perception of the peso as more stable than the weakening dollar. This initiative builds on previous efforts, as Uruguay has already seen the share of dollar assets in its central bank reserves drop from 90% in March to 84% by September after Central Bank President Guillermo Tolosa took office.
The Central Bank of Uruguay (BCU) is implementing several key measures to achieve de-dollarization. One significant step is the phased reduction of reserve requirements for short-term deposits in pesos and indexed units, which are set to reach 12% by September 1, 2026. This policy is designed to lower financial intermediation costs for banks, freeing up capital for peso-denominated loans and making them more attractive to borrowers. Conversely, the BCU plans to raise reserve requirements for dollar loans, making them less profitable for banks and discouraging dollar lending. This dual strategy aims to shift the financial system towards the local currency and create more competitive interest rates for peso loans.
In an effort to inform and encourage citizens to move away from dollar savings, the BCU has mandated that financial institutions issue warnings about exchange rate risk on dollar deposits. Starting October 1, 2026, banks must inform new individual and sole proprietorship clients about potential fluctuations in the value of their dollar savings. Existing dollar account holders will receive notifications via email or bank websites by December 31, 2026. BCU President Tolosa has defended this measure by comparing it to warning labels on processed foods, emphasizing that Uruguayans have lost almost half of their purchasing power over the last 30 years by keeping savings in dollars. This policy, however, has drawn criticism from banks, who fear it will generate distrust among depositors, though Tolosa contends it is necessary to encourage trust in the national currency.
