Argument: Dollarization can benefit nations suffering from hyperinflation

Support

• Cristina Arellano and Jonathan HeathcoteBoard , “Dollarization and Financial Integration” Board of Governors of the Federal Reserve System, International Finance Discussion Papers, Number 890, February 2007 “Ecuador dollarized in 2000 in the midst of a severe economic crisis with a collapsing banking system, a sliding local currency, and after defaulting on its Brady bonds in late 1999. The regime was implemented in an attempt to reduce inflation, bring stability to the economy, and gain credibility with international investors. Since dollarization, Ecuador’s inflation has been significantly reduced to single digits.”

• C. Fred Bergsten, Peterson Institute. “Dollarization in Emerging-Market Economies and Its Policy Implications for the United”. – “those with a history and/or recent experience of hyperinflation, like Argentina in 1991, which desperately need a strong anchor for domestic monetary stability and whose population is willing to pay the price thereof (in terms of high interest rates, recession and unemployment).”