Understanding Dollarization

Contents

1A Primer on Dollarization

1.1Introduction

1.2Asset vs Currency Substitution

1.3Official and Partial Dollarization

1.4Measuring the Degree of Partial Dollarization

1.5Causes of Dollarization

1.6Dollarization and Banking Dollarization

1.7A Brief History of Dollarization Around the Globe

1.7.1Latin America

1.7.2Transition Economies

1.7.3Asia

1.7.4Sub-Saharan Africa

1.8Exchange Rate Regimes and Dollarization

2Pros and Cons of Dollarization

2.1Introduction

2.2Arguments in Favor of Dollarization

2.2.1Inflation Reduction

2.2.2Fiscal Discipline

2.2.3Reduction in the Cost of Borrowing

2.2.4Lower Transaction Costs

2.3Benefits of Partial Dollarization

2.3.1Encourages Saving

2.3.2Promotes Financial Deepening

2.4Arguments Against Dollarization ...