Costa Rica’s banking system is among the most exposed in Latin America to a sudden squeeze on dollar funding, second only to Argentina, according to a regional analysis by Moody’s Ratings that places the country among at least eight highly dollarized banking systems in the region.
The credit rating agency found that in Costa Rica and the Dominican Republic, foreign-currency deposits fed by foreign direct investment and tourism income have grown faster than international reserves and banks’ own dollar liquidity buffers. Moody’s nonetheless described Costa Rica’s reserve coverage as still solid.
The agency’s vulnerability indicator, which measures exposure to shocks in foreign-currency funding, gave Costa Rica a relatively high score for 2025. Only Argentina, whose banking system Moody’s rated the most vulnerable in the region, scored higher. As of June 2026, 37% of deposits in the Costa Rican banking system were in foreign currency, according to the report. In retail lending to individuals, 40% of loans were denominated in foreign currency, a share in which Costa Rica and Peru stand out in the region.
Measured across all lending, the dollar share is lower. The Asociación Bancaria Costarricense (ABC) puts it at 29% of the total loan portfolio as of July. Dollar savings deposits reached ₡2.39 trillion (about $5.2 billion) in June 2026, up from roughly ₡997 billion in June 2016, an increase of about 140% in a decade.
Moody’s noted that the region’s highly dollarized banking systems have gradually reduced their reliance on the dollar, even as Costa Rica’s dollar deposits have kept climbing. Part of the recent shift reflects the gap between interest rates in the two currencies. The Central Bank of Costa Rica (BCCR) cut its monetary policy rate from 3.25% to 3% in July and held it there in September, while the U.S. Federal Reserve raised its benchmark range to 3.75%–4% in September.
That leaves a gap of 75 to 100 basis points in the dollar’s favor. Returns on dollar savings tend to follow the Federal Reserve’s rate, while colón yields track the BCCR’s policy rate. BCCR president Róger Madrigal said in late September that interest rates favoring one currency increase demand for it, and that stronger demand for dollar-denominated assets can in turn raise demand for the dollar itself.
Edna Camacho, economic adviser to the ABC, said the rate differential, the abundant supply of dollars in the local market and the colón’s appreciation may be encouraging households and companies to keep surplus funds in dollar accounts. The Cámara de Bancos e Instituciones Financieras said dollarization alone does not indicate instability in the banking system, but that it requires attention and sound risk management, especially when borrowers take loans in a currency different from the one in which they earn their income.
The chamber pointed to BCCR findings that the financial system maintained adequate solvency and liquidity in 2025, and that stress tests showed acceptable capacity to withstand adverse scenarios. The ABC cited the BCCR’s annual Financial Stability Report, which found that financial intermediaries hold significant liquidity margins in both dollars and colones.
The chamber recommends that borrowers take loans in the currency in which they receive their income to reduce exchange-rate risk. Camacho noted that borrowers face both exchange-rate and interest-rate risk, and that banks use regulatory tools and simulations to manage that exposure.
The assessment arrives as the strong colón continues to reshape household and business finances. The BCCR reference rate in effect through the weekend is ₡450.04 to buy dollars and ₡456.32 to sell them and exporters such as coffee growers have warned that the exchange rate is cutting into their income.
Moody’s caveat, that the risks of dollarization fall when exchange-rate volatility stays contained, underscores how much depends on the colón remaining stable. With roughly four in ten retail loans and more than a third of deposits held in dollars, a sharp move in either direction would be felt well beyond the banks.
