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

Content: Additionally, long-term economic planning became easier for the country, since the stable dollar attracted some foreign investment. However, dollarization wasn't an entirely smooth ride for the country, and there were drawbacks. All monetary policy would be created and implemented by the United States, some thousands of miles away from Zimbabwe. Decisions made by the Federal Reserve do not take into account the best interests of Zimbabwe when creating and enacting policy, and the country had to hope that any decisions, such as open market operations, would be beneficial. Further, Zimbabwe became disadvantaged when trading with local partners, such as with Zambia or South Africa. Zimbabwe could not make its goods and services cheaper in the world market by devaluing its currency, which would attract more foreign investments from these countries. In 2019, Zimbabwe reversed course by reintroducing a new Zimbabwe dollar known as the Real Time Gross Settlement dollar in February and outlawing the use of the U.S. dollar and other foreign currencies in June. Inflation in the new Zimbabwe dollars has been steep, and substantial use of the U.S. dollar as a black market currency persists.