CEPII, Recherche et Expertise sur l'economie mondiale
Dollarization in Latin America: Much Ado About Nothing

David Khoudour-Castéras

The 2000-2001 period saw Ecuador and El Salvador adopt the dollar as their national currency. The decision was to trigger much criticism, undermining the enthusiasm of a number of developing countries prepared to relinquish a degree of independence in return for more stability and credibility. But what does the Latin American experience tell us about dollarization? Does the use of another country’s currency go hand in hand with additional costs in terms of economic performance? And do these costs outweigh the benefits resulting from greater stability?

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La Lettre du CEPII
N° 295   December 2009

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