How to Dollarize

How to Dollarize: A Step-by-Step Guide

Let's imagine a country called "Monetaria" that decides to fully dollarize its economy. Here's what Monetaria would need to do to successfully transition from its unstable local currency to the U.S. dollar:

‣

Step 1: Legal Decision and Official Announcement

‣

Step 2: Set the Conversion Exchange Rate

‣

Step 3: Convert Bank Deposits and Contracts

‣

Step 4: Replace Physical Currency

‣

Step 5: Close or Repurpose the Central Bank

‣

Step 6: Set Up Support Systems

By following these steps methodically, Monetaria could successfully dollarize its economy, ending currency instability and importing the credibility of a globally trusted currency.

Figure 1: Summary of the process of dollarization