Abstract
In the CLMV countries, namely, Cambodia, Lao PDR, Myanmar, and Vietnam, dollarization is a long-term problem that requires long-term solutions rather than quick fixes through forced de-dollarization. The benefits of de-dollarization in enhancing the effectiveness of monetary policy are exaggerated. In the early stages of transitional development, dollarization has promoted exchange rate and price stability, and financial re-intermediation in the CLMV countries. Trade expansion, financial deepening, and consequent economic growth can be attributed to an environment of exchange rate and price stability provided by dollar anchoring. When macroeconomic stability, banking culture, and regulations are firmly established, a gradual de-dollarization process can take place, thereby improving the effectiveness of monetary policy in the long run.
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The author wishes to thank Hidenobu Okuda and Koji Kubo for their valuable comments.
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Nidhiprabha, B. (2017). Economic Growth, Monetary Policy, and Dollarization in CLMV Countries. In: Kubo, K. (eds) Dollarization and De-dollarization in Transitional Economies of Southeast Asia. IDE-JETRO Series. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-57768-5_6
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DOI: https://doi.org/10.1007/978-3-319-57768-5_6
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