- September 2014
- Posted By Ninoslav
- 0 Comments
Economy of any country is an interesting subject which comes with various issues and matters. Each citizen of any country should take interest of the economy of their country. If you are discussing any economic related issue, then the term dollarization should comes in your discussion. Now, what this term is actually mean for? It is such a situation where any citizen of a specific country uses a currency from a foreign country.
Reason of this
The dollarization is a legal tender which can conduct any transaction with a foreign country both officially and unofficially. Generally, the main reason for this situation is a stable condition of foreign currency over the domestic currency. This stability of currency influences the users to use this factor. It also provides signals to a country to adjust their monetary policy as per the strong foreign currency.
Mostly used currency
Most of the citizens from different countries use a strong currency to get a better exchange rate. In time of inflammation, citizens are usually choosing a stable currency like US dollar for their transaction. Euro is also a widely used stable currency. The domestic currency has reduced the buying capacity and it can increase the use of other currency.
Get better exchange value
In this process, users are using stronger currency to get a better exchange rate. The foreign investors are using this to achieve a better deal. People who hold a stable currency can get advantage during such condition.
The process of dollarization can help citizens to trade in a better way. It comes with both advantages and disadvantages for the traders. But, one should handle it such a way, so that it can be used efficiently both for the users and country. So, it is up to you how it can be handled properly.