Daniel Gross. “The Case for Fewer but Stronger Currencies”. New York Times. February 19, 2006 – “But one economist’s reassuring stability can be another’s troubling rigidity. If the price of coffee plummets or the price for textiles falls because of competition from China, a Latin American country that has dollarized won’t have the option of cutting interest rates to stimulate growth. ‘Dollarization takes away the option of depreciation,’ Professor Hausman said.”
“Basics of Dollarization”. Joint Economic Committee Staff Report July 1999. Updated January 2000 – “It has also been claimed that there is a cost of losing flexibility in monetary policy, such as when the issuing country is tightening monetary policy during a boom while an officially dollarized country really needs looser monetary policy because it is in a recession. In a dollarized monetary system the national government cannot devalue the currency or finance budget deficits by creating inflation, because it does not issue the currency.”
Comment & Debate