Full dollarization

By Eduardo Borensztein, Andrew Berg

Subjects: Foreign exchange rates, BUSINESS & ECONOMICS, Amerikaanse dollar, Dollar, Foreign exchange, Currency substitution, Foreign Exchange, American Dollar, Internationaal betalingsverkeer, Dollarization

Description: Analyzes the costs and benefits of full dollarization, or the adoption by one country of another country's currency. Potential advantages include lower borrowing costs and deeper integration into world markets. But countries lose the ability to devalue, and become dependent on the U.S. Compares with currency board option.