Financial Dollarization Equilibria: A Framework for Policy Analysis

Rapidly rising dollarization and numerous related financial crises in recent years have heightened the need for policy action. This paper contributes to the policy debate by presenting a common analytic framework that examines the roots of de facto financial dollarization under different economic en...

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Bibliographic Details
Main Author: Ize, Alain (Author)
Format: Electronic eBook
Language:English
Published: Washington, D.C International Monetary Fund 2005
Series:IMF Working Papers Working Paper No. 05/186
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Summary:Rapidly rising dollarization and numerous related financial crises in recent years have heightened the need for policy action. This paper contributes to the policy debate by presenting a common analytic framework that examines the roots of de facto financial dollarization under different economic environments and analyzes its interplay with monetary and prudential policies. In addition to providing a systematic analysis of the existence, stability, and multiplicity of dollarization equilibria, the paper makes a few novel contributions. In particular, it stresses the key role played by monetary policy endogeneity and identifies the underlying determinants of the peso premium that are responsible for inducing a preference for the dollar in financial transactions
Physical Description:1 Online-Ressource (30 p)
ISBN:1451862059
9781451862058

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