Tag: single currency

Dollarization: The Ties That Bind Countries Together

Dollarization: The Ties That Bind Countries Together

Financial Markets Explained
The Basic Premise of Dollarization An important concept that comes into play in the forex markets is that of dollarization. Many countries have their own currencies though some choose to band together in a unified economic front. The Euro being representative of several European countries is an excellent example. A country may choose to adopt another country’s currency rather than printing their own for use on the world stage. Like anything, it has benefits and drawbacks. The announcement is typically followed by a drastic fluctuation due to the weighing economic factors. El Salvador, for example, uses the United States Dollar as its national currency. Though it does, it does not have any right to print United States Dollars or take major actions to affect its value and position. It