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31 Cato J. 339 (2011)
Dollarization: The Case of Zimbabwe

handle is hein.journals/catoj31 and id is 343 raw text is: DOLLARIZATION: THE CASE OF ZIMBABWE Joseph Noko This article investigates the recent monetary experience of Zimbabwe with dollarization. It shows how dollarization has allowed Zimbabwe to quash hyperinflation, restore stability, increase budgetary discipline, and reestablish monetary credibil- ity. Zimbabwe's hyperinflationary past and the stabilization meas- ures taken by the government are outlined, and the consequences defined. Problems arising from a lack of financial integration, an error in the choice of currency to dollarize under, and the inability of the government to enter into a formal dollarization agreement are discussed. Choice in Currency In his 1976 classic Choice in Currency, F. A. Hayek argued that the pressure for more and cheaper money led governments to monopolize the issuance of money and made inflation inevitable. He asked, Why should we not let people choose freely what money they want to use? The purpose of this article is to investigate Zimbabwe's experience with choice in currency, given its recent history of hyperinflation and Cato jounal, Vol. 31, No. 2 (Spring/Summer 2011). Copyright @ Cato Institute. All rights reserved. Joseph Noko is General Manager of a small gold mining company in Zimbabwe and a partner in an economic development consultancy in Bulawayo, Zimbabve. He thanks James A. Dom for constructive comments and Eric Bloch for helpful statis- tics and remarks. 339

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