Monetary Policy Case Study

Case Title:

Dollarisation and Countries’ Experiences

Abstract:
In the 1800s, the US did not have a domestic currency. The French franc, Spanish dollar, Portuguese escudo and English shilling were all used in the US. Like the US, many other countries had a foreign currency at some point in their history. Most of the Latin American countries had experienced unofficial dollarisation, whereas countries like Ecuador, El Salvador and East Timor had officially dollarized their currencies. Other countries like Bhutan, Namibia and Bahamas had semiofficially dollarised their economies. Dollarisation directly linked the economy of the dollarised nation with the economy of the issuing country.

Pedagogical Objectives:

• To discuss the experiences of various dollarised countries
• To discuss the effects of the different types of dollarisation on the economy that adopted any other currency as its domestic currency.

Keywords : Official and unofficial dollarisation, Currency boards, Spanish milled dollar, Foreign currency, Southeast Asian financial crisis, Currency pegging, Bank of Namibia, US dollar, Foreign exchange reserves, Belarus National Bank, South African Reserve Bank, Monetary Policy Case Study, Common monetary area, Central Bank of El Salvador, Central Payment Office, United Nations Transitional Administration in East Timor