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La dolarización financiera: experiencia internacional y perspectivas para Colombia

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Author Info

  • Carlos E. León Rincón

    ()
    (Banco de la República)

  • Alejandro Revéiz Herault

    ()
    (Banco de la República)

Abstract

Currencies in developing countries are not freely convertible; they show higher inflation and volatility levels and show periods of sharp appreciation and depreciation. These characteristics not only are a challenge for economic authorities, but also call attention to their ability to fully comply with the functions of money. Colombia, despite its disciplined monetary background, has not escaped from occasional queries about the convenience of keeping the Colombian peso. Just a few countries have chosen to fully replace their local currency with a foreign one in order to assume the entire functions of domestic currency, but there are many economies which have permitted partial dollarization. Based on international experience and Colombia’s characteristics, this paper concludes that financial dollarization would be costly, with limited and merely potential benefits.

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File URL: http://www.uexternado.edu.co/facecono/ecoinstitucional/workingpapers/cleon18.pdf
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Bibliographic Info

Article provided by Universidad Externado de Colombia - Facultad de Economía in its journal Revista de Economía Institucional.

Volume (Year): 10 (2008)
Issue (Month): 18 (January-June)
Pages: 313-341

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Handle: RePEc:rei:ecoins:v:10:y:2008:i:18:p:313-341

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Keywords: financial dollarization; partial dollarization; foreign exchange risk; balance sheet effect;

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References

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  1. Eduardo Borensztein & Andrew Berg, 2000. "The Pros and Cons of Full Dollarization," IMF Working Papers 00/50, International Monetary Fund.
  2. Alain Ize & Eric Parrado, 2002. "Dollarization, Monetary Policy, and the Pass-Through," IMF Working Papers 02/188, International Monetary Fund.
  3. Gianni De Nicoló & Patrick Honohan & Alain Ize, 2003. "Dollarization of the Banking System: Good or Bad?," IMF Working Papers 03/146, International Monetary Fund.
  4. Honohan, Patrick, 2007. "Dollarization and exchange rate fluctuations," Policy Research Working Paper Series 4172, The World Bank.
  5. Adolfo Barajas & Armando Méndez Morales, 2003. "Dollarization of Liabilities: Beyond the Usual Suspects," IMF Working Papers 03/11, International Monetary Fund.
  6. Eduardo J.J. Ganapolsky, 2003. "Optimal fear of floating: the role of currency mismatches and fiscal constraints," Working Paper 2003-31, Federal Reserve Bank of Atlanta.
  7. Eduardo Levy Yeyati & Alain Ize, 2005. "Financial De-Dollarization: Is It for Real?," IMF Working Papers 05/187, International Monetary Fund.
  8. Winkelried, Diego & Castillo, Paul, 2010. "Dollarization persistence and individual heterogeneity," Journal of International Money and Finance, Elsevier, vol. 29(8), pages 1596-1618, December.
  9. Antonio Garcia Pascual & Jorge Cayazzo & Socorro Heysen & Eva Gutierrez, 2006. "Toward an Effective Supervision of Partially Dollarized Banking Systems," IMF Working Papers 06/32, International Monetary Fund.
  10. Eduardo Levy Yeyati & Alain Ize, 1998. "Dollarization of Financial Intermediation: Causes and Policy Implications," IMF Working Papers 98/28, International Monetary Fund.
  11. S. Pelin Berkmen & Eduardo Cavallo, 2010. "Exchange Rate Policy and Liability Dollarization: What do the Data Reveal about Causality?," Review of International Economics, Wiley Blackwell, vol. 18(5), pages 781-795, November.
  12. Robert Rennhack & Masahiro Nozaki, 2006. "Financial Dollarization in Latin America," IMF Working Papers 06/7, International Monetary Fund.
  13. Marco Terrones & Luis Catão, 2000. "Determinants of Dollarization - The Banking Side," IMF Working Papers 00/146, International Monetary Fund.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. ¿Debe Argentina copiar al sistema monetario y bancario de Panamá?
    by Adrián Ravier in Punto de Vista Economico on 2012-06-13 20:34:36
  2. ¿Debe Colombia copiar al sistema monetario y bancario de Panamá?
    by Adrián Ravier in Punto de Vista Economico on 2012-07-11 17:16:55

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