Monetary Unions And Hard Pegs: Effects On Trade, Financial Dev

Description:
Financial services with global reach are becoming ever more important in the conduct and organization of the trade and investment of nations, and currencies that lack international standing lose out in this business. The result of financial development has been destabilizing currency and portfolio substitution - in favour of international currencies and against local ones. This book analyses formal approaches to overcoming monetary divisions within countries and within integrating regions, focusing on the consequences of monetary union for trade among union members and their financial development and stability. The authors discuss hard pegs such as those attempted by the currency board of Argentina, outright dollarization, such as in Ecuador, and multilateral monetary union, as in Europe, the least reversible form of monetary union and the most powerful elixir of financial integration and trade. The political classes and central banks in most countries have been reluctant to admit the market- and technology-driven forces of currency consolidation, much less yield to them. International financial institutions too are still in the habit of proffering advice about national monetary and exchange-rate policies on the assumption that getting rid of both is not even an option. Emerging-market countries, in particular, have to choose between retaining what independent monetary means they still have - and can safely use in the presence of widespread liability dollarization and currency mismatches - and formally replacing the domestic with an international currency to reduce exposure to debilitating financial crises. In concrete investigations of this choice, this volume shows that monetary union deserves a much more sympathetic hearing.

Table of Contents:
Preface; 1. Editorial Introduction; PART I: CURRENT AND PAST CONCEPTS OF MONETARY UNION; 2. Euroization, Dollarization and the International Monetary System; 3. Unilateral and Multilateral Currency Unions: Thoughts from an EMU Perspective; 4. International Money and Common Currencies in Historical Perspective; PART II: TRADE AND PRICE EFFECTS OF MONETARY UNION; 5. Geography, Trade and Currency Union; 6. Comparing Apples and Oranges: The Effect of Multilateral Currency Unions on Trade; 7. The Effect of Common Currencies on International Trade: a Meta-Analysis; 8. Common Currencies and Market Integration Across Cities: How Strong is the Link? Common Currencies and Market Integration Across Cities: How Strong is the Link?; PART III: MONETARY INTEGRATION IN LATIN AMERICA; 9. Trade Agreements, Exchange Rate Disagreements; 10. Sudden Stops, the Real Exchange Rate and Fiscal Sustainability: Argentina's Lessons; 11. Living and Dying with Hard Pegs: The Rise and Fall of Argentina's Currency Board; 12. Anatomy of a Multiple Crisis: Why Was Argentina Special and What Have We Learned from It?; PART IV: COMMON MONIES, POLITICAL INTERESTS, AND INFRASTRUCTURE; 13. America's Interest in Dollarization; 14. Dollarization and Euroization in Transition Countries: Currency Substitution, Asset Substitution, Network Externalities and Irreversibility; 15. Electronic Money and The Optimal Size Of Monetary Unions; 16. Currency Substitution in Anticipation of EU Accession; 17. Allocating Lending of Last Resort and Supervision in the Euro Area; Index