Abstract
In the last decade or so, the term “dollarization” has entered the language of economists and policymakers as a generic reference to countries that forsake their own national currencies and opt for some other sovereign nation’s currency for all (or most) transactions.1 Using the nomenclature of the University of California at Santa Barbara’s Benjamin Cohen, at the end of 2001 there were 17 countries that were either dollarized or “near dollarized.”2 In addition, there are several countries with currency board arrangements, in which the nation effectively backs its own national currency with another’s at a fixed exchange rate. The list of currency boards shrunk early in 2002 with the very visible departure of Argentina. On the other hand, since 2000, Ecuador and El Salvador have dollarized, and in the last decade several countries other than Argentina have adopted currency boards that still operate.
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