Advanced Search
MyIDEAS: Login to save this paper or follow this series

The Pros and Cons of Full Dollarization


Author Info

  • Eduardo Borensztein
  • Andrew Berg


We analyze the costs and benefits of full dollarization compared to its closest alternative, a currency board, quantifying for Argentina where possible. Potential advantages include lower borrowing costs and deeper integration into world markets. One cost is the transfer of seigniorage to the United States. The country may also lose the “exit option” to devalue in the face of major shocks. Similarly, even a country with a currency board may lose some ability to act as lender of last resort to the banking system. We review how various country characteristics influence the balance of arguments.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL:
Download Restriction: no

Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 00/50.

as in new window
Length: 32
Date of creation: 01 Mar 2000
Date of revision:
Handle: RePEc:imf:imfwpa:00/50

Contact details of provider:
Postal: International Monetary Fund, Washington, DC USA
Phone: (202) 623-7000
Fax: (202) 623-4661
Web page:
More information through EDIRC

Order Information:

Related research

Keywords: Dollarization; Exchange rate regimes; exchange rate; bonds; currency crisis; currency risk; real exchange rate; exchange rates; currency crises; bond; financial system; exchange rate regime; brady bonds; nominal exchange rate; denominated bonds; bilateral real exchange rate; eurobonds; foreign exchange; exchange rate policy; currency boards; bilateral exchange rates; financial markets; international capital; present value; rediscounts; international banks; financial sector; reserve requirements; brady bond; real exchange rates; eurobond; bond spreads; international capital movements; exchange rate fluctuations; bilateral exchange rate; treasury bond; international reserves; domestic interest rates; denominated bond; floating exchange rate; treasury bonds; exchange reserves; government bonds; currency devaluations; exchange rate volatility; exchange rate pegs; foreign exchange reserves; exchange rate risk; fixed exchange rate; nominal devaluation; exchange rate realignment; exchange rate change; exchange rate movements; international financial markets; eurobond market; effective exchange rate; stabilization programs; real exchange rate fluctuations; financial intermediation; financial assets; real exchange rate volatility; exchange rate peg; exchange rate flexibility; exchange rate arrangements; sovereign bonds; currency mismatch; exchange rate adjustments; currency substitution; exchange rate changes; bank rediscounts; exchange rate appreciation; international capital markets; international financial statistics; exchange rate adjustment; domestic financial system; financial resources; yields on bonds; exchange rate arrangement; international finance; floating exchange rates; real effective exchange rate; indexed bonds; financial systems; liquidity support; stock of money; currency regime;


References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Graciela L. Kaminsky & Carmen M. Reinhart, 1996. "The twin crises: the causes of banking and balance-of-payments problems," International Finance Discussion Papers, Board of Governors of the Federal Reserve System (U.S.) 544, Board of Governors of the Federal Reserve System (U.S.).
Full references (including those not matched with items on IDEAS)


Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.


This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


Access and download statistics


When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:00/50. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jim Beardow) or (Hassan Zaidi).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.