02052cas a2200253 a 4500 AALejournalIMF004017 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451863420 1018-5941 BD-DhAAL BD-DhAAL Schumacher, Liliana. Adopting Full Dollarization in Postconflict Economies : Would the Gains Compensate for the Losses in Liberia? / Liliana Schumacher, Jiro Honda. Washington, D.C. : International Monetary Fund, 2006. 1 online resource (25 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper discusses whether adopting the U.S. dollar as the sole legal tender could help Liberia, a postconflict economy, to boost growth and strengthen fiscal discipline. In view of the performance of exchange rate regimes in many countries and Liberia's own experience with dollarization, we conclude that Liberia should not adopt full dollarization for the following reasons: (i) the alleged benefits voiced by the proponents of dollarization, in terms of enhanced fiscal discipline and faster economic growth, are not supported by the empirical evidence; (ii) dollarization would increase the Liberian economy's vulnerability to external shocks and Liberia's social fragility; (iii) banks in fully dollarized economies face additional capitalization requirements that Liberian banks cannot meet at present; and (iv) dollarization would be costly in terms of real resources because of the loss of seigniorage. Mode of access: Internet Honda, Jiro. IMF Working Papers; Working Paper ; No. 2006/082 Full text available on IMF http://elibrary.imf.org/view/journals/001/2006/082/001.2006.issue-082-en.xml IMF e-Library