Ecn 150 - Study guides, Class notes & Summaries

Should countries forgo using their own currency and adopt as legal tender a stable foreign currency? Address the following in your answer: a. Give two advantages and two disadvantages of dollarizatio n b. Does a country need permission to dollarize? c. Would dollarization be reversible? What are the differences in the structures of the New York and Nasdaq exchanges? How are stocks traded on each? What role (or roles) does a specialist or market maker play in the two exchanges? Barr Bank has just...

1. Should countries forgo using their own currency and adopt as legal tender a stable foreign currency? Address the following in your answer: a. Give two advantages and two disadvantages of dollarization. Advantages: Lower cost of foreign credit; enhance credibility of government policy; stability; international trade. Disadvantages: lose seignorage; lose lender of last resort; lose control of monetary policy. b. Does a country need permission to dollarize? No c. Would dollarization b...