Central Banking, Monetary Policy and the Political Economy of Dollarization

Edited by Sylvio Antonio Kappes, Assistant Professor, Federal University of Alagoas, Brazil, Co-Editor, Review of Political Economy and Co-Director, Monetary Policy Institute and Andrés Arauz, Senior Research Fellow, Center for Economic and Policy Research, USA

‘The dollar is the key global currency. In a broad sense, the world is dollarized since most financial and trade transactions are denominated in that currency, and central banks and other agents hold their reserves in dollars. However, many countries have adopted the dollar as their currency. This book gathers a dream team of specialists on the cases of dollarization, both formal and informal, and similar processes like the adoption of the euro, around the globe. It is a must read, since the dominant role of the dollar and dollarization are not going to subside any time soon.’

• ContentsIntroduction to Central Banking, Monetary Policy and the PolitcalEconomy of Dollarization 1Sylvio Kappes and Andrés ArauzPART I THEORETICAL CONSIDERATIONS1 The political economy of dollarization and its discontents 7Sergio Rossi2 How economic crises have strengthened the role of the UnitedStates dollar and its implications for developing economies 19Esteban Pérez CaldenteyPART II DOLLARIZATION IN LATIN AMERICA3 Dollarization and the macroeconomic and fiscal performanceof the dollarized countries of Latin America 50Cindy Gianella Tutiven Desintonio4 Financial de-dollarization in Argentina – when the windalways blows from the East 109Eduardo A. Corso and Máximo Sangiácomo5 Dollarization, private banking and financial profitability inEcuador 145Monika Meireles and Gabriela Rivera6 Two decades of dollarization in El Salvador: pains and gainsin a road less traveled 166Juan Carlos Moreno-Brid, Rodrigo Morales-López andEdgar Francisco Pérez-Medina7 The political economy of Panama’s dollarized interbankmarket 183Andrés ArauzPART III DOLLARIZATION IN AFRICA8 Dollarization in anglophone West African countries: a casestudy of Nigeria and Ghana 218Salewa Olawoye and Emmanuel GrahamPART IV DOLLARIZATION IN ASIA9 Determinants of dollarization in Vietnam 236Pham Thi Hoang AnhPART V EUROIZATION10 Montenegro and the Euro: implications for policy space 258Lara Merling11 The costs and the resilience of unilateral dollarization: thecase of euroization in Kosovo 278Jean-François Ponsot12 Why and how to start a national parallel digital currency inItaly, and why it would work – fast 294Trond Andresen