dollarization: meaning, definition, pronunciation and examples
LowFormal, Academic, Business
Quick answer
What does “dollarization” mean?
The process by which a country adopts the US dollar as its official or semi-official currency.
Audio
Pronunciation
Definition
Meaning and Definition
The process by which a country adopts the US dollar as its official or semi-official currency.
It can also refer to the more general phenomenon of a foreign currency, most often the US dollar, replacing or circulating alongside the local currency in a country's economy.
Dialectal Variation
British vs American Usage
Differences
The term 'dollar' in this context specifically refers to the US Dollar, making the term more frequent and central in American economic discourse. In British contexts, it might be explicitly clarified as 'US dollarization'.
Connotations
Neutral in technical contexts. Can carry negative connotations of lost monetary sovereignty in political discourse.
Frequency
More frequently used in American English and in international economics publications, which are often US-centric.
Grammar
How to Use “dollarization” in a Sentence
the dollarization of [country/economy]Vocabulary
Collocations
Examples
Examples of “dollarization” in a Sentence
verb
British English
- The government sought to dollarise the economy to curb hyperinflation.
- Economies that are heavily dollarised face different monetary challenges.
American English
- The government moved to dollarize the economy to stabilize prices.
- Dollarizing the financial sector can increase stability but reduce policy flexibility.
adverb
British English
- The economy operates dollarisedly in many sectors. (Rare/constructed)
American English
- The economy operates dollarizedly in many sectors. (Rare/constructed)
adjective
British English
- The country has a partially dollarised banking system.
- A dollarised economy loses control over its interest rates.
American English
- The country has a partially dollarized banking system.
- A dollarized economy is vulnerable to U.S. Federal Reserve decisions.
Usage
Meaning in Context
Business
Analysts warn that high inflation may force the country into dollarization.
Academic
The paper examines the long-term economic effects of official dollarization on small developing nations.
Everyday
Because of the crisis, many people are using dollars instead of the local currency – it’s like informal dollarization.
Technical
Dollarization is often measured by the share of foreign currency deposits in the total banking system.
Vocabulary
Synonyms of “dollarization”
Strong
Neutral
Weak
Vocabulary
Antonyms of “dollarization”
Watch out
Common Mistakes When Using “dollarization”
- Spelling: 'dollarisation' (UK) and 'dollarization' (US) are both correct but regional. Using 'dollarisation' in a formal US context would be atypical.
- Pronunciation: Stress on the fourth syllable: dol-lar-i-ZA-tion.
FAQ
Frequently Asked Questions
While 'dollarization' specifically refers to the US dollar, the broader concept of using a foreign currency is called 'currency substitution' (e.g., 'euroization').
Yes, but it is difficult and risky. The process is called 'de-dollarization' and requires building strong confidence in the domestic currency.
Official (or full) dollarization is when a government legally adopts the foreign currency. Unofficial (or de facto) dollarization happens when people and businesses voluntarily use the foreign currency due to lack of trust in the local one.
Not necessarily. While it can bring immediate stability by eliminating currency risk and hyperinflation, it also strips the country of tools to respond to local economic shocks and ties its fate to US monetary policy.
The process by which a country adopts the US dollar as its official or semi-official currency.
Dollarization is usually formal, academic, business in register.
Dollarization: in British English it is pronounced /ˌdɒləraɪˈzeɪʃən/, and in American English it is pronounced /ˌdɑːlərəˈzeɪʃən/. Tap the audio buttons above to hear it.
Phrases
Idioms & Phrases
- “[A country] is a dollarized economy”
Learning
Memory Aids
Mnemonic
Think: DOLLAR + IZATION = making a place use DOLLARS.
Conceptual Metaphor
CURRENCY IS A TOOL / CURRENCY IS A CHOICE (e.g., 'adopting' a currency like choosing a tool).
Practice
Quiz
What is a primary consequence of full dollarization for a country?