Dollarization Essay Research Paper Richard W Stevenson
Dollarization Essay, Research Paper
Richard W. Stevenson s article Greenspan View on Wider Use of Dollar discusses a procedure he refers to as dollarization. Harmonizing to Mr. Stevenson, A figure of states have been sing abandoning their national currencies and following the American dollar the recognized international benchmark of stableness as a manner of cut downing involvement rates, rising prices, and exchange rate volatility. It is this procedure that he refers to as dollarization. Harmonizing to the article, several states already use the dollar as their official currency and many, such as Russia and the Philippines, have yet to do it official even though the dollar is widely circulated at that place. In fact So strong is foreign demand for dollars that approximately two-thirds of all American currency is in circulation outside the United States.
The demand for dollars outside the US is apprehensible, particularly in the case of Russia. The business communities have small trust in their national currency due to the fact that infla
tion is out of control, it is therefor more prudent to conduct business in a more stable currency, such as the American dollar. Under the circumstances, it seems that official conversion to dollars is the next logical step, and economically speaking it is. However no government can operate based strictly on economic reasons, there is the issue of nationalism. Most people would be insulted to know that their country is adopting a new national currency. It must also be noted that the US is only willing to go through with this possibility if the countries are looking to adopt not only the dollar, but also the types of policies that are required to create stability. In other words, the US is on a political Crusade to convert other countries to its economical policies. That is where the comparison to the Euro (present throughout the entire article) fails. The Euro signifies an economical and political union of several able countries. Dollarization is yet another attempt of the US government to exert its influence on other countries affairs.