ABSTRACT
Dollarization has become an important phenomenon in Poland, by reducing effectiveness of monetary policy and creating complications in macroeconomic management. The 1990 Polish reform has aimed at reducing dollarization, without much success. Dollarization has started in Russia. One dubious advantage of dollarization is its prevention of hyperinflation reaching crisis proportions and thus enabling survival through persistent hyperinflation. Since the 1970s, in Latin American countries with high inflation, the currency substitution has been going on under the name of dollarization, “the US. dollar has gradually but persistently been replacing national currencies in the performance of all types of monetary services. Pablo E. Guidotti and Carlos A. Rodriguez observe that, “dollarization goes to the very core of money and the monetary system”. Guidotti and Rodriguez note that dollarization in Latin America has been greatly facilitated by freedom granted to financial and currency markets since 1970s.
