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Published in:
2007 | OriginalPaper | Chapter
Dollarization, the Functions of a Central Bank, and the Ecuadorean Economy
Author : Paul Davidson
Published in: Interpreting Keynes for the 21st Century
Publisher: Palgrave Macmillan UK
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At the beginning of the new millennium, Ecuador abandoned the use of national money and instead adopted the U.S. dollar as its official currency for settling domestic contractual transactions. Since it is claimed that dollarization eliminates the use of monetary policy (and exchange rate policy) as weapons to cure a nation’s macroeconomic problems, is there any need for a Central Bank of Ecuador? More importantly has, or will, dollarization solve Ecuador’s macroeconomic problems and be a useful aid in providing conditions that help foster substantial real economic growth for its residents?