Dollarization is a desperate measure that countries like El Salvador and Ecuador have successfully adopted, but it carries severe costs: if the banking system runs into trouble, the country cannot bail out banks because they don't control the currency, and most money is bank deposits, not physical currency, making dollarization workable but not necessarily advisable.
causalpending
Speaker
Kenneth RogoffEvidence Quote
“The biggest cost is if your banking system runs into trouble, you can't bail them out.”
Source
Kenneth Rogoff on Monetary Moves, Fiscal Gambits, and Classical Chess | Conversations with Tyler— Mercatus CenterCreated: 8/11/2026, 7:10:38 AM
My Notes
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