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Essay / Research Paper Abstract
This 14 page paper has three parts. The first is an overview and explanation of what dollarization is, including the three main categories of dollarization. The second part is an overview and explanation of what happened in Ecuador, politically and economically, that led to the adoption of official and full dollarization. The last part discusses the effects of dollarization on the economy. Inflation, interest rates, and GDP are discussed. Statistical data are included. Bibliography lists 9 sources.
Page Count:
14 pages (~225 words per page)
File: MM12_PGecuad.rtf
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Unformatted sample text from the term paper:
main international currencies are the U.S. dollar, the German mark and the Japanese yen.3 There are three models of dollarization: 1. Unofficial dollarization happens when people in any country hold
a good amount of their financial wealth in foreign assets even if that foreign currency is not legal tender in their country. It is difficult to measure the degree of
unofficial dollarization in any nation, as might be expected, but estimates are often relatively accurate. Most often, the U.S. dollar is the foreign currency used in unofficial dollarization. This is
particularly true in Latin American countries. Examples of countries who are unofficially dollarized include much of Latin America, Bolivia, Mexico, Central America and Russia, among others.4 2. Semiofficial dollarization means
that a foreign currency is considered legal tender and that currency might even make up the greater amount of bank deposits. This is often referred to as a bimonetary system.
The foreign currency, however, is not used to pay wages, taxes or the everyday expenses, like utility bills, groceries, etc. Semiofficially dollarized countries maintain a central bank or whatever monetary
authority they have and they develop their own monetary policies. Bahamas, Cambodia, Haiti, Bhutan and Channel Islands are among the countries that are semiofficially dollarized.5 3. Official dollarization, also referred
to as full dollarization, happens when the foreign currency is either the predominant or the exclusive legal tender in the country. The foreign currency can be used for all transactions,
even for paying government bills. If the country still keeps its own domestic currency, it has a very minor role, for example, it may be issued only in coins that
have a small value. While most officially dollarized countries use just one foreign currency, the term applies to countries that use two or more foreign currencies as legal tender, including
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