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An Evaluation of Monetary Regime Options for Latin America

Author/Editor: Berg, Andrew | Borensztein, Eduardo | Mauro, Paolo
Authorized for Distribution: December 1, 2002
Electronic Access: Free Full Text (PDF file size is 1,303KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: We assess monetary regime options for Latin American countries. The costs of a common currency are likely to outweigh its benefits, as those countries face diverse economic shocks, do not trade much with each other, and are affected by common international financial shocks only to the same extent as the average pair of emerging markets. Unilateral dollarization would be desirable only for those countries where there are strong links to the U.S. economy, the credibility of the monetary authorities is irreversibly lost, and there is keen demand for dollar-denominated financial assets. Finally, some countries in the region seem to be good candidates for meaningful and useful floating.
 
Series: Working Paper No. 02/211
Subject(s): Exchange rate regimes | Latin America | Monetary unions | Dollarization
Author's keyword(s): Exchange rate regimes | currency union | dollarization
 
English  
    Published:   December 1, 2002        
    ISBN/ISSN:   1934-7073   Format:   Paper
    Stock No:   WPIEA2112002   Pages:   40
    Price:   US$15.00
       
     
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