Testimony On Full Dollarization

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1999-04-22

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I will discuss the motivation and potential benefits of full dollarization, namely, abandoning domestic currency (identified with the peso) and adopting a foreign currency (identified with the U.S. dollar), with special reference to emerging-market economies. I will argue, first, that full dollarization is especially advantageous for countries with large dollar debts, and, second, that in these economies standard criticisms against full dollarization are largely unwarranted.

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Presented Before a Joint Hearing of the Subcommittees on Economic Policy and International Trade and Finance Washington, DC, April 22, 1999.

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