Official Dollarisation/Euroisation: Motives, Features and Policy Implications of Current Cases

63 Pages Posted: 23 Aug 2005

See all articles by Adalbert Winkler

Adalbert Winkler

Frankfurt School of Finance & Management gemeinn├╝tzige GmbH

Francesco Mazzaferro

European Central Bank (ECB)

Carolin Nerlich

European Central Bank (ECB) - Directorate General Economics

Christian Thimann

AXA Group

Date Written: February 2004

Abstract

Official and unilateral dollarisation/euroisation has become a common policy advice for emerging market economies. Against this background, the paper provides a comprehensive review of all the main cases of dollarisation/euroisation, analysing motives, features and policy implications of this exchange rate regime. The main results are that policies fostering integration with the anchor country, in particular fiscal transfers, tourism and offshore finance, have been crucial in supporting the exchange rate regime. To this end, most dollarised/euroised countries have exploited advantages that are largely prior to the choice of exchange rate regime, namely their small size, geographic proximity to the anchor country, and politically dependent status. Thus, recommending dollarisation/euroisation irrespective of countries' ex ante degree of integration with the potential anchor country seems to bear considerable risks, as dollarisation/euroisation does not seem to be a straightforward substitute for integration.

Suggested Citation

Winkler, Adalbert and Mazzaferro, Francesco and Nerlich, Carolin and Thimann, Christian, Official Dollarisation/Euroisation: Motives, Features and Policy Implications of Current Cases (February 2004). ECB Occasional Paper No. 11, Available at SSRN: https://ssrn.com/abstract=748975

Adalbert Winkler (Contact Author)

Frankfurt School of Finance & Management gemeinn├╝tzige GmbH ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

Francesco Mazzaferro

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Carolin Nerlich

European Central Bank (ECB) - Directorate General Economics ( email )

Kaiserstrasse 29
D-60311 Frankfurt am Main
Germany

Christian Thimann

AXA Group ( email )

25 avenue Matignon
Paris, 75008
France

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