European Parliament Library

Prudential Responses to De Facto Dollarization, Alain Ize, Andrew Powell

Creator
Contributor
Abstract
We develop a theoretical framework that encompasses four distinct motives for dollarization and discuss appropriate policy responses to help contain dollarization and its attendant risks. "Moral hazard" dollarization provides a clear case for prudential policy activism. However, prudential reform will have only a limited impact on dollarization when the main culprits are fear of floating and lack of monetary credibility. In such cases, a concerted and comprehensive reform agenda, including market-oriented and institutional reforms, would be needed to shift the balance of risks in favor of the domestic currency. While quantitative limits on dollarization could also be used to speed up de-dollarization, risks could be high
Table Of Contents
""Contents""; ""I. INTRODUCTION""; ""II. THE ROOTS OF FINANCIAL DOLLARIZATION""; ""III. IMPLICATIONS FOR PRUDENTIAL POLICIES""; ""IV. CONCLUSIONS""; ""REFERENCES""; ""APPENDICES""; ""I. THE DEFAULT THRESHOLDS""; ""II. THE MVP EQUILIBRIUM""; ""III. DEFAULT EQUILIBRIA""; ""IV. MULTIPLE DEFAULT EQUILIBRIA""; ""V. MORAL HAZARD DOLLARIZATION""
Language
eng
Literary Form
non fiction
Note
Description based upon print version of record
Physical Description
1 online resource (42 p.)
Specific Material Designation
remote
Form Of Item
online
Isbn
9781452753294

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