This volume provides a rigorous and balanced perspective on the causes and implications of dollarization, and the basic policies and options to deal with it: the adaptation of the monetary and prudential frameworks, the development of local-currency substitutes, and the scope for limiting...

Intro -- Contents -- I. INTRODUCTION -- II. TRENDS IN FINANCIAL DOLLARIZATION -- III. FINANCIAL DOLLARIZATION AS A RATIONAL RESPONSE TO INFLATION -- IV. THE ROLE OF CREDIT RISK -- V. CONCLUDING REMARKS -- APPENDIX I -- APPENDIX II -- REFERENCES.

Financial (unofficial) dollarization is widely seen as a critical source of financial fragility in both developing and emerging economies. This volume provides a rigorous and balanced perspective on the causes and implications of dollarization, and the basic policies and options to deal with it:...

This paper tests several explanations for financial dollarization (FD), with an emphasis on Latin America. The results provide evidence that FD is a rational response to inflation uncertainty. The paper builds on previous research by finding that an exchange rate policy biased towards currency...