In six pages this paper examines 'dollarization' in terms of concept and then considers countries' using the U.S. dollar instead of their own currencies in an assessment of pros and cons. Four sources are cited in the bibliography.
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its value or decrease it. Currency was also often adjusted in order to focus on monetary policy. These days however, the monetary system
is more global in nature due to international trade and the falling of various borders as it pertains to the flow of goods and services. As a result, nations currencies
have had to adapt to this change. Many are opting, in fact, to peg their own currencies to the U.S. dollar, or even adopt a Currency Board System, rather than
a floating rate exchange. Dollarization is about as close to a single worldwide monetary system as one can get. But is it really
a good thing? The answer to this is: it depends on who you talk to. Because there are enough nations who respect their own currencies however, dollarization is not likely
to become hugely successful any time in the near future. AN OVERVIEW Before determining the pros and cons of dollarization, it would be
a good idea to review exactly what dollarization entails. As a bit of background, many countries, fearing devaluation or hyperinflation in their own
economies, have often turned to more stable for currencies, or the assets within those currencies (McTigue, 1999). In its most basic form, dollarization is the legal recognition of the U.S.
dollar (or some other well-known currency) as the whole currency for all transactions in a given nation (Dorn, 2000). If we use the U.S. dollar as an example, such
a move means that countries that peg their own currencies to the dollar looked to the Federal Preserve as its central bank (Dorn, 2000). Countries that dollarize mean that they