Title: Dollarization Definition
Headings: Dollarization
Dollarization
What Is Dollarization?
Key Takeaways
Understanding Dollarization
An Example of Dollarization

Content: Dollarization Definition
Economics Macroeconomics
Dollarization
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Eric Estevez is financial professional for a large multinational corporation. His experience is relevant to both business and personal financial topics. Article Reviewed on December 26, 2020
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Eric Estevez
Updated Dec 26, 2020
What Is Dollarization? Dollarization is the term for when the U.S. dollar is used in addition to or instead of the domestic currency of another country. It is an example of currency substitution. Dollarization usually happens when a country’s own currency loses its usefulness as a medium of exchange, due to hyperinflation or instability. Key Takeaways
Dollarization is when a country begins to recognize the U.S. dollar as a medium of exchange or legal tender alongside or in place of its domestic currency. Dollarization normally occurs when the local currency has become unstable and begun to lose its usefulness as a medium of exchange for market transactions. Dollarization can have both benefits and costs. It typically results in enhanced monetary and economic stability, but necessarily involves loss of economic autonomy in monetary policy.