Calvo, Guillermo A.Presented Before the Subcommittee on Domestic and Monetary Policy Committee on Banking and Financial Services Washington, DC, June 22, 2000.I was invited here to explain about Dollarization, the benefits and costs for the US and the countries that adopt it. Before I start my formal presentation, I would like to state, in no uncertain terms, that I am a firm supporter of such system for many Emerging Market economies, EM, especially if it is done within the context of a Treaty with the US (as in Senator Connie Mack’s proposal). Moreover, I believe global dollarization will have direct economic benefits for the US, and enhance its role as a worldwide leader. Dollarization is the decision to abandon the national currency and replace it by the US Dollar (or some other hard currency like the Euro). This is a major economic and political decision. By default, a dollarized country adopts US monetary policy, even though the two countries could be going through different phases of the business cycle. Moreover, a dollarized country gives up the option of assisting banks by printing money in the case of a systemic bank run. In the first, and more substantive, part of my presentation I will argue that EM have already given up those functions. Therefore, dollarization is a win-win proposition except possibly for some fiscal costs (called seigniorage in the technical jargon). In the second part of the presentation I will evaluate the advantages of regional dollarization, and argue that dollarization is a winning proposition for the US. I will start the discussion by focusing on two key themes: Fear of Floating, and Lender of Last Resort.en-USFear of FloatingLender of Last Resortdollarizationemerging market economiesseignioragePresentation