TED Case Studies
By Suzannah Wimberly, Trade Environment Database Projects, American University
May 9, 2000
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"The introduction of the Euro to the world's financial markets in 1999 made the idea of one currency for numerous countries seem possible, and attractive... The Euro also made other nations more than a little nervous as to how they would manage to compete with this new, and strengthening, currency. These factors led the US, Canada, Mexico, Argentina, Chile, Brazil, and Columbia to begin to explore the feasibility of creating the 'Amero' as a counterpart to the Euro. The 'Amero' would be a common currency, not necessarily the US dollar, that all of the countries in the Americas would use as their own.
...Some economists believe that full Dollarization or the 'Amero' associated with a Free Trade Agreement of the Americas will not happen for 5-20 years."
[Appoximate article date 1/1/1999]
In an age of increasing globalization, unlike any before, countries feel more pressure to open all aspects of their economies. There is a large movement towards regionalism in the form of national free trade associations. There is money to make, markets to tap and trade alliances to form. No one wants to be left behind in this revolution. Countries feel the pressure to either join the revolution or fall farther behind developmentally. Dollarization, which is when a foreign country adopts the United States currency as its main form of currency, is at the intersection of these pressures. Ironically, though, this pressure to liberalize is causing many countries to cling tighter to their cultural heritage. This problem of how best to face this duality is most real in the Western Hemisphere, in Latin America and the Caribbean, where proximity turns up the threat of cultural assimilation. They not only have to contend with "the giant of the North" as a neighbor, but also with the added pressures of how best to grow their economies in today's global climate. Dollarization is the proposed panacea. Ecuador is a believer....
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