Official Dollarization: Current Experiences and Issues
35 Pages Posted: 16 Apr 2011
Date Written: October 1, 2000
Literature on official dollarization remains scant and new contributions are emerging only very recently, largely motivated by the emergence of the Euro and the Argentine and Ecuadorian dollarization projects (see, e.g., Borensztein and Berg 2000; Bogetic´ and Schuler 1999; Calvo 1999a, 1999b; Hanke and Schuler 1999; Hanke (2000); and Joint Economic Committee 2000). But the global trend towards greater dollarization and monetary unions suggests wider relevance of dollarized economies than was previously the case. This paper attempts to answer several basic questions about dollarization: What is the present incidence of officially dollarized economies, and what are some of their salient characteristics? What has been the experience of Panama, the largest and most well-known officially dollarized economy? What do we know about the economic costs and benefits of official dollarization? What are the existing and prospective seigniorage sharing arrangements? What conditions may be conducive to official dollarization? What are the prospects for official dollarization in Argentina and other Western Hemisphere countries?
Keywords: dollarization, dollarized economies, monetary unions, Panama, Latin America
JEL Classification: F33, P52, O54
Suggested Citation: Suggested Citation