Is Dollarisation a Viable Option for Latin America?

Graham Bird

Chapter 4 in International Finance and the Developing Economies, 2004, pp 51-59 from Palgrave Macmillan

Abstract: Abstract In January 2000 Ecuador announced that it was replacing its own currency (the sucre) with the US dollar; a process known as ‘dollarisation’. Although in parts of Latin America the dollar has been used unofficially as a medium of exchange for many years and frequently has been preferred by some nationals to their domestic currency, this was the first time that a country that had previously had its own currency had opted to abandon it and to replace it officially with the US dollar. Panama, which also uses the dollar as legal tender, has never had its own currency. Argentina, with a currency board arrangement in place since 1991 (effectively tying the quantity of pesos to foreign exchange reserves), has seriously contemplated going to the next stage in the form of dollarisation but has yet to make the move.

Keywords: Exchange Rate; Monetary Policy; Exchange Rate Regime; Macroeconomic Policy; Flexible Exchange Rate (search for similar items in EconPapers)
Date: 2004
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DOI: 10.1057/9780230599840_4

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