5 ms·

Several countries already use the dollar like El Salvador, Cambodia, Ecuador, Panama. Cambodia and Panama use local currency in sub $1 amounts only, and El Salv

Several countries already use the dollar like El Salvador, Cambodia, Ecuador, Panama. Cambodia and Panama use local currency in sub $1 amounts only, and El Salvador and Ecuador were exclusively USD until E.S added BTC, but I know from locals there that it's rarely used and USD is still king. Argentina wouldn't be the first but it would be the biggest. My question is what happens when/if a country this big tries to dollarize? Will there be a huge demand affecting USD rates? Would we just ship them container loads of banknotes? Does the US even want this and can US officials just say no? Bonus question: Why not Euros?

xxs 3y ago
>Bonus question: Why not Euros? Euro is far, also Euro is far more left leaning (I guess) than the US (even democrats in the US would be considered right form the center in Europe). But the real issue would be the lack of currency reserves - least I'd think Argentina might have more Dollar notes than Euro ones.
- Dma54rhs 3y ago
  What on earth is a left leaning currency?
  - dsr_ 3y ago
    Clearly, a left-leaning currency is one supported by an economy based on facts, and a right-leaning currency is supported by an economy based on feelings. I don't know how this helps, though.
    - cscurmudgeon 3y ago
      Fact: Argentina's peso ("left-leaning fact-based" currency) went from worth 0.35 US dollars to now 0.0029 US dollars in less than 5 years.
  - blipvert 3y ago
    The Euro is woke, don’tcha know /s
  - xxs 3y ago
    The Euro and the eurozone (and the countries represent by) are related, along with its monetary policies. Similar to the USD (the dollar) - US is part of the name. The elected president is on the quite right side of the spectrum, so associating with any left wing policies/countries would be very unlikely, given Argentina's currency dropped massively during the last years. He won vs a candidate who used to be a financial minister overseeing several hundreds percent inflation.
- The_Colonel 3y ago
  How does Europe being left leaning matter? The exchange rate is basically as stable as USD... Or do you mean it's just because of the strong Milei's ideology?
  - xxs 3y ago
    Nothing to do with the EUR/USD rate, of course. I very much doubt the 'new' president would even hear anything left leaning, he is considered rather radical.
- kpw94 3y ago
  > Euro is far Technically, from a geography point of view, euro-using countries as official currency are closer than USD: https://eur-lex.europa.eu/EN/legal-content/glossary/outermost-regions.html https://eur-lex.europa.eu/EN/legal-content/glossary/outermos... (I.e. French guiana's currency is the Euro)
  - xxs 3y ago
    If we are to go in such technicalities, Ecuador is closer. The distance - far/close matters when it comes to the trading partners more than anything. The US and Brazil being the biggest ones[0], and the trade is in USD. [0] https://www.indec.gob.ar/uploads/informesdeprensa/i_argent_02_23EC82BFFB1E.pdf https://www.indec.gob.ar/uploads/informesdeprensa/i_argent_0...
- deleted 3y ago
  [deleted]
- the_third_wave 3y ago
  > even democrats in the US would be considered right form the center in Europe That used to be the case but it is true no longer, current 'Democrats' (between quotes because the DNC seems to be as democratic as the DRC from what I've seen) are comparable to centre-left parties in north-western Europe. The more activist wing of the 'Democrats' is comparable to socialist and communist parties in e.g. Sweden and the Netherlands.
ajmurmann 3y ago
Totally not expert opinion on the Euro question: I had the same thought and as with USD there are countries that singlelateraly adopted the Euro. The Euro also seems similarly stable. The only differences I see are: Pro-Euro: Euro already is controlled by a wider range of countries and there is some incentive to match monetary policy to accommodate those wider circumstances. So a policy is less likely to just support a single countries unique situation and conflict with Argentina's situation. Pro-USD: USD is already more widespread in South America and actively being used in Argentina right now. This advantage is very practical and concrete right now and trump's all else
- notahacker 3y ago
  I'd add that the US is generally quite in favour of dollarization even though the Fed only cares about the US and the EU is only in favour of countries adopting the Euro via it's accession process and adopting its macroeconomic rules. Certainly the ECB has no incentive to consider Argentina's economy when making monetary policy decisions, and if anything might take the opposite stance that it's a competitive threat to Eurozone trade.
  - landemva 3y ago
    > the Fed only cares about the US I presume by Fed you mean the not-government 'federal reserve' which is a contractor to Congress which tinkers with monetary policy and sets the price of money. Federal Reserve quietly provided bailouts to Europe in 2008. New York Times article, '“an open facility where European banks could come and get dollars.” So began what would become the biggest United States government bailout that most people do not know anything about.' https://www.nytimes.com/2014/02/24/business/feds-aid-in-2008-crisis-stretched-worldwide.html https://www.nytimes.com/2014/02/24/business/feds-aid-in-2008...
    - notahacker 3y ago
      But they did so because the European owned banks were active in the US serving US customers (and solvent enough to repay) which is why they had the dollar obligations they needed to borrow to meet in the first place. Argentina or Panama having a bit of an economic slowdown whilst the US is growing nicely isn't the Fed's problem: the monetary policy decisions will only take into account to the monetary policy needs of the US, and it's not particularly in the interests of the Fed to bail out Argentine bank reserve shortfalls unless the contagion is likely to hit the Us either.
kibwen 3y ago
> local currency in sub $1 amounts only I've been in favor of abolishing the minting of physical US pennies, but I suppose this is one argument against it: other countries that use the dollar might actually find pennies to be useful.
- landemva 3y ago
  The good thing for Americans about coins is they are minted and issued without incurring debt. Notes are printed, sold to 'federal reserve' for pennies per sheet, then loaned into circulation which increases the debt which Americans then pay or will pay. Notes as money is bizarre share-cropping, and USA people would be reasonable to advocate for coins in larger denominations like 10 50 and 500 to avoid borrowing notes into existence. https://www.usmint.gov/news/inside-the-mint/how-coins-are-made-bringing-coins-into-circulation https://www.usmint.gov/news/inside-the-mint/how-coins-are-ma... "Federal Reserve Banks buy coins from the Mint at face value."
  - dsr_ 3y ago
    If you're going to propose to rework the entirety of US fiscal policy, please actually recognize what you are proposing and treat it seriously. National debt is a primary tool to support growth.
    - landemva 3y ago
      Like a credit card, national debt pulls foward spending at the price of paying interest to bankers. Breaking glass windows also increases growth (or GDP) because it forces spending to replace the broken windows. Similar GDP increase when USA builds missiles to blow up bridges (over there somewhere) and later provides funds to US contractors to rebuild those bridges. GDP number go up, along with debt and interest costs.
  - hgomersall 3y ago
    All money is debt. Money is synonymous with debt. Everything you call money, including coins, notes and numbers in a proverbial spreadsheet is a record of a liability of some entity (i.e. debt). Coins and notes are liabilities of the central bank
toyg 3y ago
Argentina has been here before, in practice: https://en.wikipedia.org/wiki/Convertibility_plan https://en.wikipedia.org/wiki/Convertibility_plan It lasted about 10 years and was eventually abandoned. TLDR: "Simply put, the dollar peg overvalued the peso in the rest of the world, especially against a weak euro and the Brazilian real, reducing Argentina's competitiveness and compounding the account deficit."
deleted 3y ago
[deleted]
acdha 3y ago
Re: Euros, I think that comes down to their trade being Brazil, China, and the United States: https://www.statista.com/statistics/1331248/main-trade-partners-argentina/ https://www.statista.com/statistics/1331248/main-trade-partn... Pegging to the yuan might be the more interesting option since that has considerable risk but also I’d imagine China would look very favorably on it.
andrelaszlo 3y ago
An Argentinian could probably explain this better than I can, but there's already a parallel dollar economy in Argentina. These "blue dollars" have a semi-official exhange rate and everything. https://bluedollar.net/ https://bluedollar.net/ https://es-m-wikipedia-org.translate.goog/wiki/Mercado_negro_de_divisas?_x_tr_sl=es&_x_tr_tl=en&_x_tr_hl=en&_x_tr_pto=wapp https://es-m-wikipedia-org.translate.goog/wiki/Mercado_negro...
- hfhdjdks 3y ago
  Not an argentinean, but I don't think that's the right way to look at it. You can exchange dollars in any country and in many you can directly pay in stores if the storekeeper is flexible. You wouldn't call that a parallel dollar economy. The only additional point in Argentina is thay they have an official exchange rate that is way way different from the true exchange rate (ie the one that arises from demand and supply). That's why you can exchange dollars through the official channels and get, say, 500 pesos, or you can exchange from an unofficial one and get 1000 pesos
- warmlander99 3y ago
  The Blue dollar refers to the grey market exchange rate currently hovering around 950 Argentina Pesos to 1 US Dollar. The official exchange rate is set at about 350 to 1. It is actually quite hard to spend US dollars directly in Arg. However it is common for both foreigners and Argentines to use grey market money changers at the blue rate. Argentines are only allowed to purchase a limited number of US dollars at the official rate each month so if they want to travel or protect the value of their savings from the extreme inflation they need to use the grey market to do so. The Blue dollar exist because the current government artificially pegs the peso at the lower rate.
anovikov 3y ago
Montenegro uses Euros (always did) and they seem to be doing just fine. U.S. won't say no because for U.S., it means in effect getting a no-interest, indefinite duration loan from Argentina (free money).

xxs 3y ago

>Bonus question: Why not Euros? Euro is far, also Euro is far more left leaning (I guess) than the US (even democrats in the US would be considered right form the center in Europe). But the real issue would be the lack of currency reserves - least I'd think Argentina might have more Dollar notes than Euro ones.

Dma54rhs 3y ago
What on earth is a left leaning currency?
- dsr_ 3y ago
  Clearly, a left-leaning currency is one supported by an economy based on facts, and a right-leaning currency is supported by an economy based on feelings. I don't know how this helps, though.
  - cscurmudgeon 3y ago
    Fact: Argentina's peso ("left-leaning fact-based" currency) went from worth 0.35 US dollars to now 0.0029 US dollars in less than 5 years.
- blipvert 3y ago
  The Euro is woke, don’tcha know /s
- xxs 3y ago
  The Euro and the eurozone (and the countries represent by) are related, along with its monetary policies. Similar to the USD (the dollar) - US is part of the name. The elected president is on the quite right side of the spectrum, so associating with any left wing policies/countries would be very unlikely, given Argentina's currency dropped massively during the last years. He won vs a candidate who used to be a financial minister overseeing several hundreds percent inflation.
The_Colonel 3y ago
How does Europe being left leaning matter? The exchange rate is basically as stable as USD... Or do you mean it's just because of the strong Milei's ideology?
- xxs 3y ago
  Nothing to do with the EUR/USD rate, of course. I very much doubt the 'new' president would even hear anything left leaning, he is considered rather radical.
kpw94 3y ago
> Euro is far Technically, from a geography point of view, euro-using countries as official currency are closer than USD: https://eur-lex.europa.eu/EN/legal-content/glossary/outermost-regions.html https://eur-lex.europa.eu/EN/legal-content/glossary/outermos... (I.e. French guiana's currency is the Euro)
- xxs 3y ago
  If we are to go in such technicalities, Ecuador is closer. The distance - far/close matters when it comes to the trading partners more than anything. The US and Brazil being the biggest ones[0], and the trade is in USD. [0] https://www.indec.gob.ar/uploads/informesdeprensa/i_argent_02_23EC82BFFB1E.pdf https://www.indec.gob.ar/uploads/informesdeprensa/i_argent_0...
deleted 3y ago
[deleted]
the_third_wave 3y ago
> even democrats in the US would be considered right form the center in Europe That used to be the case but it is true no longer, current 'Democrats' (between quotes because the DNC seems to be as democratic as the DRC from what I've seen) are comparable to centre-left parties in north-western Europe. The more activist wing of the 'Democrats' is comparable to socialist and communist parties in e.g. Sweden and the Netherlands.

ajmurmann 3y ago

Totally not expert opinion on the Euro question: I had the same thought and as with USD there are countries that singlelateraly adopted the Euro. The Euro also seems similarly stable. The only differences I see are: Pro-Euro: Euro already is controlled by a wider range of countries and there is some incentive to match monetary policy to accommodate those wider circumstances. So a policy is less likely to just support a single countries unique situation and conflict with Argentina's situation. Pro-USD: USD is already more widespread in South America and actively being used in Argentina right now. This advantage is very practical and concrete right now and trump's all else

notahacker 3y ago
I'd add that the US is generally quite in favour of dollarization even though the Fed only cares about the US and the EU is only in favour of countries adopting the Euro via it's accession process and adopting its macroeconomic rules. Certainly the ECB has no incentive to consider Argentina's economy when making monetary policy decisions, and if anything might take the opposite stance that it's a competitive threat to Eurozone trade.
- landemva 3y ago
  > the Fed only cares about the US I presume by Fed you mean the not-government 'federal reserve' which is a contractor to Congress which tinkers with monetary policy and sets the price of money. Federal Reserve quietly provided bailouts to Europe in 2008. New York Times article, '“an open facility where European banks could come and get dollars.” So began what would become the biggest United States government bailout that most people do not know anything about.' https://www.nytimes.com/2014/02/24/business/feds-aid-in-2008-crisis-stretched-worldwide.html https://www.nytimes.com/2014/02/24/business/feds-aid-in-2008...
  - notahacker 3y ago
    But they did so because the European owned banks were active in the US serving US customers (and solvent enough to repay) which is why they had the dollar obligations they needed to borrow to meet in the first place. Argentina or Panama having a bit of an economic slowdown whilst the US is growing nicely isn't the Fed's problem: the monetary policy decisions will only take into account to the monetary policy needs of the US, and it's not particularly in the interests of the Fed to bail out Argentine bank reserve shortfalls unless the contagion is likely to hit the Us either.

kibwen 3y ago

> local currency in sub $1 amounts only I've been in favor of abolishing the minting of physical US pennies, but I suppose this is one argument against it: other countries that use the dollar might actually find pennies to be useful.

landemva 3y ago
The good thing for Americans about coins is they are minted and issued without incurring debt. Notes are printed, sold to 'federal reserve' for pennies per sheet, then loaned into circulation which increases the debt which Americans then pay or will pay. Notes as money is bizarre share-cropping, and USA people would be reasonable to advocate for coins in larger denominations like 10 50 and 500 to avoid borrowing notes into existence. https://www.usmint.gov/news/inside-the-mint/how-coins-are-made-bringing-coins-into-circulation https://www.usmint.gov/news/inside-the-mint/how-coins-are-ma... "Federal Reserve Banks buy coins from the Mint at face value."
- dsr_ 3y ago
  If you're going to propose to rework the entirety of US fiscal policy, please actually recognize what you are proposing and treat it seriously. National debt is a primary tool to support growth.
  - landemva 3y ago
    Like a credit card, national debt pulls foward spending at the price of paying interest to bankers. Breaking glass windows also increases growth (or GDP) because it forces spending to replace the broken windows. Similar GDP increase when USA builds missiles to blow up bridges (over there somewhere) and later provides funds to US contractors to rebuild those bridges. GDP number go up, along with debt and interest costs.
- hgomersall 3y ago
  All money is debt. Money is synonymous with debt. Everything you call money, including coins, notes and numbers in a proverbial spreadsheet is a record of a liability of some entity (i.e. debt). Coins and notes are liabilities of the central bank

toyg 3y ago

Argentina has been here before, in practice: https://en.wikipedia.org/wiki/Convertibility_plan https://en.wikipedia.org/wiki/Convertibility_plan It lasted about 10 years and was eventually abandoned. TLDR: "Simply put, the dollar peg overvalued the peso in the rest of the world, especially against a weak euro and the Brazilian real, reducing Argentina's competitiveness and compounding the account deficit."

deleted 3y ago

[deleted]

acdha 3y ago

Re: Euros, I think that comes down to their trade being Brazil, China, and the United States: https://www.statista.com/statistics/1331248/main-trade-partners-argentina/ https://www.statista.com/statistics/1331248/main-trade-partn... Pegging to the yuan might be the more interesting option since that has considerable risk but also I’d imagine China would look very favorably on it.

andrelaszlo 3y ago

An Argentinian could probably explain this better than I can, but there's already a parallel dollar economy in Argentina. These "blue dollars" have a semi-official exhange rate and everything. https://bluedollar.net/ https://bluedollar.net/ https://es-m-wikipedia-org.translate.goog/wiki/Mercado_negro_de_divisas?_x_tr_sl=es&_x_tr_tl=en&_x_tr_hl=en&_x_tr_pto=wapp https://es-m-wikipedia-org.translate.goog/wiki/Mercado_negro...

hfhdjdks 3y ago
Not an argentinean, but I don't think that's the right way to look at it. You can exchange dollars in any country and in many you can directly pay in stores if the storekeeper is flexible. You wouldn't call that a parallel dollar economy. The only additional point in Argentina is thay they have an official exchange rate that is way way different from the true exchange rate (ie the one that arises from demand and supply). That's why you can exchange dollars through the official channels and get, say, 500 pesos, or you can exchange from an unofficial one and get 1000 pesos
warmlander99 3y ago
The Blue dollar refers to the grey market exchange rate currently hovering around 950 Argentina Pesos to 1 US Dollar. The official exchange rate is set at about 350 to 1. It is actually quite hard to spend US dollars directly in Arg. However it is common for both foreigners and Argentines to use grey market money changers at the blue rate. Argentines are only allowed to purchase a limited number of US dollars at the official rate each month so if they want to travel or protect the value of their savings from the extreme inflation they need to use the grey market to do so. The Blue dollar exist because the current government artificially pegs the peso at the lower rate.

anovikov 3y ago

Montenegro uses Euros (always did) and they seem to be doing just fine. U.S. won't say no because for U.S., it means in effect getting a no-interest, indefinite duration loan from Argentina (free money).