Optimal Central Bank Areas, Financial Intermediation, and Mexican Dollarization
AbstractThis paper argues that the most important effects of Mexican dollarization would operate not through the standard "optimal currency area" channels, which involve gains from reducing costs of translating and exchanging currencies, gains from stabilization of business cycles. Nor would it operate through possible welfare improvements from dollarization as a commitment device for monetary policy. Instead, it would operate through the effects of dollarization on financial intermediation, investment, and economic growth. In particular, dollarization--like adoption of the Euro--would involve not only a change in the currency used to quote prices, perform accounting, and make transactions, but also to a change in central bank (for Mexico), with attendant changes in supervision, regulation, and monetary policies that, by affecting incentives of banks and other financial intermediaries, would affect the amount of financial intermediation and therefore overall investment and growth. Examples drawn from various theories of financial intermediation illustrate how the scale of intermediation can be affected by central bank policies, and how this affects the costs and benefits of dollarization.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoArticle provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.
Volume (Year): 33 (2001)
Issue (Month): 2 (May)
Contact details of provider:
Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879
Other versions of this item:
- Alan C. Stockman, 2001. "Optimal central bank areas, financial intermediation, and Mexican dollarization," Proceedings, Federal Reserve Bank of Cleveland, pages 648-668.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Richard Pomfret, 2004.
"Sequencing Trade and Monetary Integration: Issues and Applications to Asia,"
School of Economics Working Papers
2004-14, University of Adelaide, School of Economics.
- Pomfret, Richard, 2005. "Sequencing trade and monetary integration: issues and application to Asia," Journal of Asian Economics, Elsevier, vol. 16(1), pages 105-124, February.
- Gaetano Antinolfi & Todd Keister, 2001. "Dollarization as a monetary arrangement for emerging market economies," Review, Federal Reserve Bank of St. Louis, issue Nov., pages 29-40.
- Richard Pomfret, 2003. "Formation and Dissolution of Monetary Unions: Evidence from Europe, and Lessons for Elsewhere," School of Economics Working Papers 2003-03, University of Adelaide, School of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If references are entirely missing, you can add them using this form.