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How to Dollarize in Argentina Now

Journal article published in 1 by Kurt Schuler, Steve H. Hanke
This paper was not found in any repository; the policy of its publisher is unknown or unclear.
This paper was not found in any repository; the policy of its publisher is unknown or unclear.

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Postprint: policy unknown
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Abstract

The policies Argentina has followed have led its economy into a dead end. Uncertainty about the future value of the peso has become the biggest immediate obstacle to economic growth. The peso is widely distrusted and, especially under current circumstances, has no prospect of becoming credible in the near or medium term. Distrust of the peso has weakened the banking system. Official dollarization can help Argentina return to economic growth. This study explains how Argentina should dollarize now. It proposes the following main steps: • Officially replace the peso with the U.S. dollar at an exchange rate of 1 peso = 1 dollar. • Eliminate the central bank as a body issuing currency. Transfer its financial assets to other bodies. • Allow banks to issue notes (paper money). Bank notes would not be forced tender; as with bank-issued traveler's checks, people would have the choice of accepting them or not. • Remove exchange controls soon after dollarization, which should be feasible because dollarization would increase confidence in the banking system.