What Is Dollarization and Why Does Argentina Consider It

Argentina has a long history of printing money to compensate for government overspending. That’s produced long periods of high inflation, even hyper-inflation. Small wonder, then, that the South American nation periodically considers the radical step known as dollarization, which to date has been fully tried only by much smaller economies.

It means adopting the US dollar as the legal tender and unit of account. Full dollarization means all local currency in circulation is exchanged for greenbacks, and all assets and contracts are converted to dollars. A country can make such a move unilaterally, without consultation with the US. (The unrelated term “de-dollarization” refers to periodic efforts to challenge the greenback’s dominance in international commerce and status as the world’s de facto reserve currency.)