Pestergaines: +extended definition

2011-07-13T23:18:01Z

+extended definition

← Older revision		Revision as of 23:18, 13 July 2011
Line 1:		Line 1:
	The term '''dollarization''' is shorthand for the use of any foreign [[currency]] by another country.		The term '''dollarization''' is shorthand for the use of any foreign [[currency]] by another country (it does not have to be the [[U.S. dollar]]).

	Most developing countries have a limited, unofficial form of dollarization. To a greater or lesser degree, their residents hold foreign currency and foreign currency-denominated deposits at domestic banks. In high inflation countries, [[U.S. dollar\|dollars]] or some other hard currency may be in widespread use in daily transactions, alongside the local currency.		Most developing countries have a limited, unofficial form of dollarization. To a greater or lesser degree, their residents hold foreign currency and foreign currency-denominated deposits at domestic banks. In high inflation countries, [[U.S. dollar\|dollars]] or some other hard currency may be in widespread use in daily transactions, alongside the local currency.

Pestergaines: Created initial page.

2011-07-13T23:13:45Z

Created initial page.

New page

The term '''dollarization''' is shorthand for the use of any foreign [[currency]] by another country.

Most developing countries have a limited, unofficial form of dollarization. To a greater or lesser degree, their residents hold foreign currency and foreign currency-denominated deposits at domestic banks. In high inflation countries, [[U.S. dollar|dollars]] or some other hard currency may be in widespread use in daily transactions, alongside the local currency.

In a '''full dollarization''', a country officially adopts the currency of another for all financial transactions, except perhaps the need for coins.<ref name="Berg_Full">Andrew Berg, Eduardo Borensztein. [http://www.imf.org/external/pubs/ft/issues/issues24/index.htm "Full Dollarization - The Pros and Cons"], ''[[International Monetary Fund]]'', Economic Issues No. 24, December 2000. Referenced 2011-07-14.</ref> Recent examples include [[Ecuador]], [[El Salvador]], [[Kosovo]] and [[Montenegro]].<ref name="Hulsmann_Paper_Money">[[Jörg Guido Hülsmann]]. ''[[The Ethics of Money Production]]'', online version, Chapter 17. International Paper-Money Systems, 1971-?, p.223-236, referenced 2011-07-14.</ref>

==Dollarization and inflation==
{{Main|Inflation}}

Countries which sustained high inflation often experience dollarization. A government that has grossly abused its monopoly over the currency and payments system will often find this monopoly more difficult to enforce in the aftermath. Reducing dollarization and regaining control of monetary policy is often one of the major aims of disinflation policy after a period of elevated inflation. Yet de-dollarization can be extremely difficult. This is especially true for countries with repeated bouts of high inflation.<ref name="Reinhart_Different">Carmen M. Reinhart and Kenneth S. Rogoff. [http://press.princeton.edu/titles/8973.html "This Time is Different"], ''Princeton University Press'', ISBN 978-0-691-14216-6, p. 191-196. Referenced 2011-07-14.</ref>

==References==
{{Reflist}}

==Links==
* {{wplink}}

[[Category:Economic concepts]]
{{Stub}}

Dollarization - Revision history

Pestergaines: +extended definition

Pestergaines: Created initial page.