Argument: It is likely that the US will eventually share the benefits of seigniorage

Issue Report: Dollarization

Supporting Evidence:

  • Senator Connie Mack, “Joint Economic Committee Staff Report :Encouraging Official Dollarization in Emerging Markets” April 1999
  • “Sharing seigniorage is important not so much in itself as for reducing an obstacle to dollarization. Dollarization has the potential to boost economic growth in many countries because it nearly eliminates the risk of devaluation and bring interest rates closer to the levels that exist in the United States. The gains that higher economic growth would generate are potentially much larger than the amounts involved in seigniorage. ”
  • ” Dollarization will be more attractive the more seigniorage the United States gives. This study assumes that the United States will give dollarizing countries all the net seigniorage from increases in the dollar monetary base attributable to their becoming dollarized. The United States will retain all the seigniorage it collects from the approximately $540 billion of the dollar monetary base already in circulation, except for a small amount to “grandfather” already dollarized economies.”