Economic Issues

Full Dollarization: The Pros and Cons

Author/Editor:

Eduardo Borensztein ; Andrew Berg

Publication Date:

December 20, 2000

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

Summary:

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.

Series:

Economic Issues No. 2000/004

Subject:

Banking Currencies Currency boards Dollarization Exchange rates Financial crises Foreign exchange Monetary policy Money