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Latin America and the Dollar Bloc in the Twenty-first Century: To Dollarize or Not?

Published online by Cambridge University Press:  02 January 2018

Kenneth P. Jameson
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Abstract

The choice of exchange rate regime is a continuing challenge to Latin American policymakers, who currently face pressure to dollarize their economies. The constraints imposed by the “dollar bloc,” the informal but powerful currency bloc that ties Latin America to the dominant currency, are central to that choice. Current weak economic performance has called the bloc's norms and principles into question and has made the exchange rate an open issue. Ecuador's full official dollarization is one possible strategy for countries with political stability but poor economic performance to gain access to needed dollar resources. Most of Latin America, however, will continue with variants of managed floating exchange rates, and the periodic foreign exchange crises will provide access to official dollar resources and facilitate renegotiation of the terms of outstanding debt.

Type
Research Article
Information
Latin American Politics and Society , Volume 43 , Issue 4 , Winter 2001 , pp. 1 - 35
Copyright
Copyright © University of Miami 2001

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