This book takes a global approach by discussing one of today's most controversial topics in business; dollarization. Since the collapse of the Soviet Union, and the formation of the Euro, many countries are debating whether or not a common currency is in their best interest.

This book takes a global approach by discussing one of today's most controversial topics in business; dollarization. Since the collapse of the Soviet Union, and the formation of the Euro many countries are debating whether or not a common currency is in their best interest.

Theoretical and empirical analysis of de jure dollarization. With the persistent instability of international financial markets, emerging economies are exploring new ways to reduce exposure to capital flow volatility. Some analysts argue that financially open economies are best served by more flexible regimes, while others argue in favor of extreme exchange rate regimes that have a strong commitment to a fixed parity or dispense with an independent currency. The successful launch of the euro has made more realistic the prospect of replacing a national currency with a strong foreign one. Recent examples include the adoption of the US dollar by Ecuador and El Salvador. The introduction of a foreign currency as sole legal tender, termed full (de jure) dollarization, has been the center of much political and academic debate. This book provides a comprehensive analysis of the issues from both theoretical and empirical perspectives. The topics discussed include the role of balance sheet effects, the linkage between currency risk and country risk, the impact of dollarization on trade, financial integration and credibility, the implications of dollarization for the lender of last resort, and the institutional and political economy aspects of dollarization.

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.

De facto (unofficial) dollarization, defined as the holding by residents of assets and liabilities denominated in a foreign currency, is a policy concern in an increasing number of developing economies. This paper addresses the dollarization debate from this perspective, with the goal of setting the stage for a more detailed and focused discussion of whether de-dollarization should be a policy objective and, if so, how best to pursue this objective. We review existing theories of de facto dollarization and the extent to which they are supported by the available evidence, presents the main strategies for reform, and proposes a list of policy recommendations.

Between 1998 and 2002 Mexico was host to an intense debate over dollarization. This paper examines the conjunctural factors which led to the emergence of this debate, reviews the main participants in the debate and their arguments, and discusses why the debate ended. We further argue that the Mexican debate can best be understood not as one between rival ideological positions but between different, say, mainstream neo-liberal positions. There is no mainstream consensus on the preferred form of the institutional governance of money. The Mexican debate on dollarization reflects this rather than simply the imperatives of global market pressures. Publishing Agency: United.