[PDF] Is Adopting Full Dollarization The Solution eBook

Author : Mr.Eduardo Borensztein
Publisher : International Monetary Fund
Page : 28 pages
File Size : 41,52 MB
Release : 2000-12-20
Category : Business & Economics
ISBN : 9781557759931

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Analyzes the costs and benefits of full dollarization, or the adoption by one country of another country’s currency. Potential advantages include lower borrowing costs and deeper integration into world markets. But countries lose the ability to devalue, and become dependent on the U.S. Compares with currency board option.

Author : Eduardo Borensztein
Publisher : International Monetary Fund
Page : 38 pages
File Size : 29,21 MB
Release : 2000-03
Category : Business & Economics
ISBN :

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There is an old joke that says that the exam questions in economics remain the same every year-only the answers change. Certainly, the debate about the best exchange rate regime has been with us forever, but new answers keep appearing. The newest answer to the question of what exchange rate regime countries should choose is none. That is, countries should forgo using their own currency entirely and adopt as legal tender a stable foreign currency, most commonly the U.S. dollar. Then-president Carlos Menem of Argentina suggested last year that Argentina should adopt the U.S. dollar-that is, dollarize-as the ultimate solution to its long history of difficulties with monetary and exchange rate policy. More recently, Ecuador has announced its intention to adopt the dollar, in the context of a deep economic and political crisis. Prominent economists have begun to argue that essentially all developing countries should also dollarize (see Calvo and Reinhart, 1999). Not only developing countries, however, are considering dollarization. Partly prompted by the example of the adoption of the euro this year, some have suggested that Canada should adopt the U.S. dollar as well.

Author : Andrew Berg
Publisher :
Page : 19 pages
File Size : 27,37 MB
Release : 2000-01-01
Category :
ISBN : 9781557759979

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Analyzes the costs and benefits of full dollarization, or the adoption by one country of another country's currency. Potential advantages include lower borrowing costs and deeper integration into world markets. But countries lose the ability to devalue, and become dependent on the U.S. Compares with currency board option.

Author : Mr.Luis Ignacio Jácome
Publisher : International Monetary Fund
Page : 33 pages
File Size : 21,20 MB
Release : 2010-04-01
Category : Business & Economics
ISBN : 1455200654

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This paper identifies key aspects that countries willing to officially dollarize must necessarily address. Based on country experiences, it discusses the critical institutional bases that are necessary to unilaterally introduce a new legal tender, describes the relevant operational issues to smooth the transition toward the use of the new currency, and identifies key structural reforms that are necessary to favor the sustainability over time of this monetary regime. The paper is aimed at providing preliminary guidance to policy makers and practitioners adopting official dollarization. The paper does not take a position on how appropriate this monetary arrangement is. Experiences from adopting dollarization in Ecuador, El Salvador, Kosovo, Montenegro, and Timor-Leste are illustrated briefly.

Author : Jiro Honda
Publisher : International Monetary Fund
Page : 30 pages
File Size : 41,1 MB
Release : 2006-03
Category : Business & Economics
ISBN :

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This paper discusses whether adopting the U.S. dollar as the sole legal tender could help Liberia, a postconflict economy, to boost growth and strengthen fiscal discipline. In view of the performance of exchange rate regimes in many countries and Liberia's own experience with dollarization, we conclude that Liberia should not adopt full dollarization for the following reasons: (i) the alleged benefits voiced by the proponents of dollarization, in terms of enhanced fiscal discipline and faster economic growth, are not supported by the empirical evidence; (ii) dollarization would increase the Liberian economy's vulnerability to external shocks and Liberia's social fragility; (iii) banks in fully dollarized economies face additional capitalization requirements that Liberian banks cannot meet at present; and (iv) dollarization would be costly in terms of real resources because of the loss of seigniorage.

Author : Dominick Salvatore
Publisher : Oxford University Press
Page : 476 pages
File Size : 18,62 MB
Release : 2003-03-27
Category : Business & Economics
ISBN : 0190288671

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This book takes a global approach, with an emphasis on North and Latin America respectfully, by discussing one of today's most controversial topics in business; Dollarization. With the collapse of the former Soviet Union, and the formation of the Euro in Europe, many countries and debating whether or not a common currency is in their best interest. This intriguing volume brings together the leading participants in the current dollarization debates. Many advocate the notion of a common currency, while others feel that in doing so will create financial costs for all that take part, with the severity varying from country to country.

Author : Matias Vernengo
Publisher : Edward Elgar Publishing
Page : 319 pages
File Size : 38,28 MB
Release : 2006-01-01
Category : Business & Economics
ISBN : 1847200257

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This book brings together an impressive and diverse group of authors to discuss its central theme: whether or not the dollarized international monetary system is sustainable in the context of the global economy it helped create. In addition to its uniquely well-rounded and comprehensive coverage of the issues, this lively and highly readable volume provides an accurate assessment of the lack of consensus in the current debate. A must read for anyone interested in currency crises and the increasing vulnerability of the dollar. Jane D Arista, Director of Progams, Financial Markets Center, US This book deals with the economic consequences of monetary integration, which has long been dominated by the Optimal Currency Area (OCA) paradigm. In this model, money is perceived as having developed from a private sector cost minimization process to facilitate transactions. Not surprisingly, the book argues, the main advantage of monetary integration in the OCA context is the reduction of transaction costs, yet the validity of OCA to analyze processes of monetary integration seems to be limited at best. The contributors in this volume try to go beyond the OCA model and understand the political economy of monetary integration by comparing the European Monetary Union with the dollarization (formal and informal) process in Latin America. The contributors, many of whom are leading lights, reflect the disagreements and the changing views on the proper monetary arrangements in a globalized world and suggest that monetary integration and dollarization are not the solution for the great majority of countries around the world. Monetary Integration and Dollarization brings together mainstream and heterodox views of monetary integration and uses the European and North American experiences as a guide for the discussion of dollarization in developing countries. It will appeal to scholars, researchers and policy makers in the fields of financial and international economics.

Author : Emre Ozsoz
Publisher : Walter de Gruyter GmbH & Co KG
Page : 154 pages
File Size : 31,27 MB
Release : 2016-05-24
Category : Business & Economics
ISBN : 3110434032

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A very commonly observed phenomenon in developing and emerging market economies is the use of another country’s currency (whether the US dollar or another currency) in lieu or in addition to the local currency. The most common type of this financial phenomenon is partial (de facto) dollarization where foreign currencies are used side by side with local currency for saving and borrowing purposes in addition to serving as medium of exchange. Governments in these countries have been encouraging dollarization for years by allowing their citizens to save and borrow from local banks in foreign currency. Yet the existence of multiple currencies on banks' balance sheets on both the asset and liability side poses risks to the health and stability of the banking system. This book evaluates the practical aspects of partial dollarization in countries such as Turkey, South Korea, Peru, and Cambodia among others. Starting with the origins of the phenomenon, the impact on banking systems and financial depth of the credit markets are discussed along with risks to the banking systems. Challenges faced by Central Banks and banking regulators are evaluated using recent country studies.

Author : David E. Altig
Publisher : Cambridge University Press
Page : 342 pages
File Size : 45,37 MB
Release : 2003-09-11
Category : Business & Economics
ISBN : 9781139440066

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This volume collects the proceedings from a conference on the evolution and practice of central banking sponsored by the Central Bank Institute of the Federal Reserve Bank of Cleveland. The articles and discussants' comments in this volume largely focus on two questions: the need for central banks, and how to maintain price stability once they are established. The questions addressed include whether large banks (or coalitions of small banks) can substitute for government regulation and due central bank liquidity provision; whether the future will have fewer central banks or more; the possibility of private means to deliver a uniform currency; if competition across sovereign currencies can ensure global price stability; the role of learning (and unlearning) the lessons of the past inflationary episodes in understanding central bank behavior; and an analysis of the European Central Bank.