The paper focuses on dollarization of the monetary sector, and in particular on holdings asset by residents of foreign currency deposits. The paper acknowledges, however, dollarization of monetary assets popularly is part of a big process of financial market integration. ... The downside of dollarization is that the country gives up its right to influence its own monetary policy by adjusting the money supply.... This suggestion is exerted by then-president Carlos Menem of Argentina in 1999, is to rescue difficulties with monetary and exchange rate policy as an efficient solution to its long hi...

• Word Count: 3668
• Approx Pages: 15
• Has Bibliography
• Grade Level: Undergraduate

"We expect the markets to reflect the true value of currency - the way that currencies ought to be valued is based upon economic activity, a fiscal policy, monetary policy of the respective governments, the potential for growth, and the potential for long-term viability of economies that's how our respective currencies ought to be valued- (President Bush) Over the past two years the value of the American dollar relative to other currencies, such as the Japanese Yen and the Euro, has declined dramatically. ... As the above quote from President Bush points out, the current administratio...

• Word Count: 1225
• Approx Pages: 5
• Has Bibliography
• Grade Level: Undergraduate

Otherwise these policies destabilising capital flows would inevitably undermine the exchange rate. ... The result was large devaluations of the exchange rates of these countries, especially against the US dollar; large interest rate increased to support the exchange rates at their new lower levels (to prevent wholesale over reaction and collapse in foreign exchange markets and to help contain the strong inflationary forces thus set in motion); and extra restrictions in fiscal policy designed to raise national saving, contain domestic spending and reassure foreign investors and international in...

• Word Count: 2133
• Approx Pages: 9
• Has Bibliography
• Grade Level: Undergraduate

Hong Kong Government's fiscal policy had been conservative and had accumulated huge surpluses prior to 1997. ... Also, Exchange Fund papers, which were intended as a substitute for treasury bonds, form Hong Kong's monetary base and are monetary aggregates in nature, and were mostly held by financial institutions for their liquidity management. Such yields indicated prevailing monetary conditions more than commercial borrowing rates. ... Even with the emergence of huge fiscal deficit these years, the government is inclined to tap the fiscal reserve and to set goals in achieving budget...

• Word Count: 1396
• Approx Pages: 6
• Grade Level: Undergraduate

Exchange Rate Arrangements In 1944, The International Monetary Fund (IMF) was created to encourage exchange stability (Radebaugh, Gray, & Black, 2006, p.351). ... Fixed Exchange Rate Policy According to the United States Agency of International Development (2011), "A fixed exchange rate regime might better be called, the fix the exchange rate (foreign currency price of the national currency) and, if necessary, devalue (lower the foreign currency price of the national currency) when it becomes too difficult to maintain the rate regime". ... The International Monetary Fund can tighten ...

• Word Count: 1468
• Approx Pages: 6
• Has Bibliography
• Grade Level: Undergraduate