Round Table: Policy Options and Strategies for Dollarized Economies

After glancing through all the material that has been presented, I am fully satisfied that the situation has been very well diagnosed; and that the origins and manifestations of dollarization, the problems in dealing with it and what to do with it in the future have been discussed thoroughly However, I have the impression that the need for fiscal discipline has not been stressed enough, and I believe that a very important problem in Latin America is that — perhaps with the sole exception of Chile — we have not been able to truly establish a believable fiscal policy for the medium term. Furthermore, the subject of fiscal dominance over monetary policy weighs heavily in many of the region’s countries, including dollarized ones. Another aspect that may have been mentioned, but perhaps not as emphatically as it should have been, is that over the past 30 years Latin America has been engaged in a very profound intellectual and practical debate over the relationship between the exchange rate and competitiveness. Some of the papers do refer to it, such as Chapter 2 by Alain Ize, but I believe it is also very important at the end of the day to emphasize how to gain competitiveness without relying on the exchange rate. These structural reforms are very important and we should not lose sight of them.