{
  "title": "Adopting Full Dollarization in Postconflict Economies: Would the Gains Compensate for the Losses in Liberia?",
  "publication": "IMF Working Papers, March 1, 2006",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/adopting-full-dollarization-in-postconflict-economies-would-the-gains-compensate-for-the-18880",
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  "summary": "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.",
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      "heading": "Summary and conclusion",
      "content": "- 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.\n- Conclusion: Liberia should not adopt full dollarization for the following reasons:\n  - (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;\n  - (ii) dollarization would increase the Liberian economy's vulnerability to external shocks and Liberia's social fragility;\n  - (iii) banks in fully dollarized economies face additional capitalization requirements that Liberian banks cannot meet at present; and\n  - (iv) dollarization would be costly in terms of real resources because of the loss of seigniorage."
    },
    {
      "heading": "Major findings and analysis",
      "content": "- Empirical evidence does not support claims that full dollarization yields enhanced fiscal discipline.\n- Empirical evidence does not support claims that full dollarization produces faster economic growth.\n- Full dollarization would raise vulnerability to external shocks and exacerbate social fragility in Liberia.\n- Banking sector implications: fully dollarized regimes impose additional capitalization requirements that Liberian banks cannot meet at present.\n- Fiscal/resource cost: loss of seigniorage would be a costly real-resource implication of dollarization."
    },
    {
      "heading": "Subject and keywords",
      "content": "- Subject: Banking, Currencies, Dollarization, Exchange rate arrangements, Government asset and liability management\n- Keywords: deutsche mark, dollarization debate, dollarization regime, exchange rate, foreign exchange, full dollarization, WP\n\nSource: IMF Working Papers landing page for \"Adopting Full Dollarization in Postconflict Economies: Would the Gains Compensate for the Losses in Liberia?\"\n\n---\n\n Content in this bundle\n\n- wp0682\n  - wp0682 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp0682 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/adopting-full-dollarization-in-postconflict-economies-would-the-gains-compensate-for-the-18880"
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    "Authors: Liliana B Schumacher, Jiro Honda",
    "Published: March 1, 2006",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451863420.001",
    "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.",
    "Conclusion: Liberia should not adopt full dollarization for the following reasons:",
    "Empirical evidence does not support claims that full dollarization yields enhanced fiscal discipline.",
    "Empirical evidence does not support claims that full dollarization produces faster economic growth.",
    "Full dollarization would raise vulnerability to external shocks and exacerbate social fragility in Liberia.",
    "Banking sector implications: fully dollarized regimes impose additional capitalization requirements that Liberian banks cannot meet at present.",
    "Fiscal/resource cost: loss of seigniorage would be a costly real-resource implication of dollarization.",
    "Subject: Banking, Currencies, Dollarization, Exchange rate arrangements, Government asset and liability management",
    "Keywords: deutsche mark, dollarization debate, dollarization regime, exchange rate, foreign exchange, full dollarization, WP",
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