Dollarization and De-Dollarization in Emerging and Developing Economies

This chapter proposes a dual analytical framework distinguishing between domestic and international dollarization in EMDEs. Domestic dollarization refers to the internal use of the U.S. dollar in place of national currencies, often resulting from macroeconomic instability and monetary distrust. International dollarization, by contrast, reflects the structural dominance of the dollar in global trade, finance, and reserves and international relations. The paper analyzes the constraints and policy responses associated with both forms, emphasizing how dollarization erodes monetary sovereignty. Case studies illustrate divergent strategies of domestic de-dollarization, including the use of central bank digital currencies. At the international level, BRICS countries, especially China, are deploying financial and technological tools, such as CIPS, the e-CNY and mbridge to contest U.S. monetary hegemony. Despite these efforts, the dollar remains dominant. The study concludes that de-dollarization is complex, non-linear, and deeply embedded in both political and institutional dynamics.