dollarization
Foreign money takeover
Dollarization is the adoption of the US dollar as a country's official or primary currency, replacing or supplementing its domestic money.
A nation may dollarize to combat hyperinflation, stabilize its economy, or attract foreign investment: Ecuador underwent full dollarization in 2000.
The term extends to unofficial dollarization, where citizens prefer dollars for savings and major transactions even when a local currency exists.
Extreme rapid price escalation
- currency collapseRapid devaluation of money
- devaluationLowering of currency worth
- capital flightRapid outflow of investments
- banking crisisSystemic failure of lenders
debt crisis · currency crisis · economic instability · depreciation · speculation · black market · financial panic · emergency measure
Real though not official
- de jureBy right of law
- foreign currencyOther nations' legal tender
- legal tenderOfficially recognized payment medium
- convertibilityCapacity for free exchange
reserve currency · currency reform · Ecuador · El Salvador · Panama · Zimbabwe · emerging markets
Payments sent abroad
- foreign investmentFunds placed in another country
- transaction costsExpenses beyond the item's price
- exchange feesCosts for converting currency
- capital flowsMovement of investment money
FDI · cross-border trade · price transparency · international commerce
National currency management institution
- national currencyOfficial money of a state
- lender of last resortEmergency credit source for banks
- monetary sovereigntyControl over own currency
- national identityShared sense of nationhood
Consistent general price levels
- inflation controlPolicies limiting price increases
- credibilityQuality inspiring trust
- predictabilityCapacity to be anticipated
- confidenceSelf-assurance or trust
certainty · equilibrium · anti-inflation · investor confidence · risk reduction
hyperinflation
Extreme rapid price escalation
- currency collapseRapid devaluation of money
- devaluationLowering of currency worth
- capital flightRapid outflow of investments
banking crisis · debt crisis · currency crisis · economic instability · depreciation · speculation · black market · financial panic · emergency measure
de facto
Real though not official
- de jureBy right of law
- foreign currencyOther nations' legal tender
- legal tenderOfficially recognized payment medium
convertibility · reserve currency · currency reform · Ecuador · El Salvador · Panama · Zimbabwe · emerging markets
remittances
Payments sent abroad
- foreign investmentFunds placed in another country
- transaction costsExpenses beyond the item's price
- exchange feesCosts for converting currency
capital flows · FDI · cross-border trade · price transparency · international commerce
central bank
National currency management institution
- national currencyOfficial money of a state
- lender of last resortEmergency credit source for banks
- monetary sovereigntyControl over own currency
price stability
Consistent general price levels
- inflation controlPolicies limiting price increases
- credibilityQuality inspiring trust
- predictabilityCapacity to be anticipated
confidence · certainty · equilibrium · anti-inflation · investor confidence · risk reduction
- economicssupply and demand, inflation, GDP, GNP, gross domestic product
- economic policymonetary policy, tax policy, fiscal discipline, fiscal stimulus, fiscal restraint
- global financeinternational banking, financial hubs, central banks, capital flows, exchange rates
- Caribbean economicstourism industry, foreign investment, GDP, trade deficit, economic growth
- EcuadorQuito, Guayaquil, Galapagos, Andes, Amazon region
- El SalvadorSan Salvador, El Salvador, San Miguel, Montecristo, Berlin
dollarizationeconomic nationalism
Favoring domestic over foreign commerce