Nobody Wants to Dollarize In Guatemala

In a strange unanimity, government officials agree with independent economic analysts: dollarization is inconvenient for Guatemala.

Tuesday, June 8, 2010

That the Guatemalan Central Bank argues against dollarization is no surprise for anyone, as its very reason for existence is questioned with it. Accordingly, its president María Antonieta de Bonilla stated that the concept has more disadvantages than advantages. As advantages, she listed “less monetary crisis, lower risk premiums and tighter integration with the U.S. currency, benefitting importers and exporters”. As disadvantages, she listed lost revenue due to losing the “primary emission of currency”, and the bank’s function as “lender of last resort”.

But, as noted in an article in Sigloxxi.com, “what worries authorities the most is that by dollarizing they would lose all control over monetary policy, as the change would eliminate most monetary tools, such as varying interest rates to moderate economic cycles and external shocks”.

A number of independent economist analysts interviewed in the article also opposed the idea of dollarizing Guatemala.

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