ABSTRACT
Chapter 3 deals with the brief history of dollar hegemony and its main historical preconditions in Georgia. The first part of the chapter provides an overview of American dollar diplomacy, its motives and implications from the US perspective and identifies key shifts in the US government discourse on dollarization. The chapter also discusses the contours and historical preconditions of the international monetary system and outlines the debate on currency hierarchy.
The second part of the chapter engages with the transition agenda globally and more specifically concerning post-Soviet states. A critical review of early transition policies sheds light on the integration of post-Soviet Georgia into the world economy and the international monetary system. This section aims to outline linkages between the genesis of dollarization and early transition policies in Georgia (since 1991), including the early liberalization of trade, prices, capital accounts or currency. Georgia was already demonstrating the highest dollarization rate in the post-Soviet space by the mid-1990s. The chapter seeks to outline the inevitability of this phenomenon for Georgia within the transition agenda.
