Dollarization

3. WORLDS ECONOMY IMPACTS OF DOLLARIZATION Dollarization have both corroboratory and negative impacts to the economy . The positive effect are dollarization provides a hedge against swelling in the interior(prenominal) currency and slew increase the stability of the banking system. Because of having a huge dollar US in the banking system will help us against the inflation . Allowing national banks to accept deposits in exotic currency doer that depositors do not have to send their cash bug out of the country when they want to switch it into foreign currency. Official dollarization is easier to decompose than unofficial dollarization because by eliminating the domestic currency it eliminates problems from shifts between domestic currency and foreign currency. And since high inflation and other financial problems in developing countries more often originate from the domestic currency rather than from the most widely used foreign currencies, official dollarization eliminates those problems. An officially dollarized country relinquishes an independent monetary policy and imports the monetary policy of the country whose currency it uses, therefore hidden asset, saving money rate will be stable.

lucre the lending ability of the bank and multinational ifiliation, fasten international lend, gain the ability to control the money, create the easy elan to the international market entry. It also helps stabilize the real sub rate. Besides, reduce the service cost. In the officially dollarized country, the cost much(prenominal) as: rate magnetic variation between different money exchange, will be released. All the rate cost is unnecessary, therefore, reduce the business cost. Investment and commercial advancement. In the officially dollarized country, dollarization groundwork reject the balance of payment, control arbitrage of exchange . assist free commerce and international investment. Narrow the rate variance in both official and unofficial market. Financial desegregation plus official dollarization... If you want to get a luxuriant essay, order it on our website: Ordercustompaper.com

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