A Dollarization/Free‐Banking Blueprint for Argentina

Steve H. Hanke

in The Dollarization Debate

Published in print May 2003 | ISBN: 9780195155358
Published online November 2003 | e-ISBN: 9780199832989 | DOI:
A Dollarization/Free‐Banking Blueprint for Argentina

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This chapter analyses the impact of official dollarization on Argentina’s economy. It argues that replacing the peso issued by the central bank with dollar-denominated notes issued by offshore commercial banks would eliminate the perceived risk of peso depreciation, increase the supply of bank reserves, reduce banks’ demand for reserves, and encourage deposits into the banking system. This would lead to lower interest rates, and boost Argentina’s economy.

Keywords: Argentina; dollarization; peso; currency; monetary policy

Chapter.  6504 words. 

Subjects: International Economics

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