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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:
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.


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