Reasons and consequences of dollarization policy

Reasons and Consequences of Dollarization Policy The purpose of this paper is to analyse countries which resolved to adopt full dollarization policy in their respective markets. This paper explains the existing difference between full and partial dollarization, which is practiced much more frequently in various countries, also observes the main features, theoretical advantages and disadvantages of this policy. One of the main purposes of this analysis is to observe which exact countries have implemented full dollarization policy in practice, what were social, political and economic reasons that encouraged these countries to adopt another currency and it also seeks to draw any possible common dollarization reasons that occurred in practical cases. Also, by comparing different practices, this paper seeks to investigate whether this policy has proved to be successful or not and summarizing insights are provided as well. Summarizing the circumstances of dollarization of all distinguished countries in this research, the conclusion is reached that there was no only way to implement practical full dollarization. Based on dollarization cases the dollarization occurred during both the crisis periods and as a stable and planned political measure. Observing the consequences of dollarization it was noticed that it can potentially improve the economic and institutional condition of the country, but in order to achieve significant long term results country must further support and sustain this policy by respective policy