Where's the exciting battlefield Gift Center

Economic globalization, especially the globalization of capital, has profoundly changed the operational mechanism of the international economy. In the era when the scale and speed of capital flow are not very large and fast, the most likely external shocks an economy will encounter are mainly from import and export prices. At that time, it made sense for policymakers to retain the power to adjust the exchange rate. However, today, for those small and weak economies, especially the emerging market economy, the biggest and most likely external shock or threat is no longer the change of import and export prices, but the sudden change of the direction and quantity of capital flow, which inevitably leads to violent and reluctant currency devaluation. The Asian crisis is a lesson to be learned. It is particularly worth mentioning that the sudden change of capital flow is often not e to the economic operation of the receiving country, that is, it contains a large speculative component. The change of external shock from import and export prices to capital flow constitutes a basic reason for the adjustment of foreign economic policy. An important consequence of the above transformation is that, contrary to popular and dominant theories (such as the "three difficult choices" mentioned earlier), floating exchange rate does not necessarily enable emerging economies with high capital dependence to enjoy independent monetary policy. In other words, when investors withdraw a lot of capital from emerging markets, the economy with a purely floating exchange rate system is likely to suffer from a collapse of the exchange rate. In order to take precautions, it is inevitable to raise interest rates. This proposition is supported by a lot of experience. Some statistical studies show that there is no evidence to support the judgment that the real interest rate of countries with fixed exchange rate system is higher than that of countries with floating exchange rate system ring recession; The opposite is true in large numbers. During the worst Asian financial crisis in the summer of 1998, the real interest rate level of Mexico with floating exchange rate system was much higher than that of Argentina with currency board system. That is to say, even if an economy attempts to maintain the independence of monetary policy by floating the exchange rate, this attempt is usually futile In a word, the nature of the challenge has changed, and the way to deal with it should change accordingly
the direct and basic reason why dollarization has increasingly become one of the policy choices lies in people's distrust of their own currencies and policies and the significant and profound changes in the international monetary system. With the outbreak of the financial crisis in emerging markets, the increasing scale and speed of international capital flow with the increasing degree of economic globalization, and the weak ability of international financial institutions in the process of preventing and dealing with financial crisis, people's sense of distrust has been greatly increased. As a result, in the face of the fact that independent small currencies are more likely to suffer from external shocks, the implementation of a similar dollarization policy or the establishment of a monetary bureau system to avoid exchange rate risk has naturally been placed on the table of many economic decision makers as a very realistic choice. Today, the rudiment of the global monetary system of "opoly" of euro and US dollar plus "small partner" of Japanese yen has emerged [4], and is likely to become a reality in the near future (Bergsten 1999b). This will force other economies to choose one of the following three ways: to safeguard their monetary sovereignty, to enter the euro area or the US dollar area (or the yen area), or to establish a currency board system with a dominant currency as the reserve currency. Asia, Latin America and the Middle East will mainly join the U.S. dollar area or use the U.S. dollar as the reserve currency to establish the currency board system, while eastern Europe and Africa will mainly become the territories of the euro. Even if there are still some countries striving to uphold their monetary sovereignty, the number of such countries and economies is undoubtedly much smaller than that of 175 countries. In a sense, in today's increasingly globalized world, there is no need for the existence of small currencies, and it seems to be becoming a consensus. Those countries that refuse to give up their currency sovereignty for political reasons are likely to live in a world of endless financial crises (leddet, 1999; Hanks 1998
the economic globalization of the United States, which accounts for nearly one fourth of the global output value, constitutes the basis of dollarization. The degree of globalization in the United States has increased rapidly in the last 15 years. In 1975, the sum of foreign stocks and bonds purchased by American investors and American stocks and bonds purchased by foreign investors only accounted for 4% of the GDP of the United States in that year. By the end of 1997, this important proportion, which measures the degree of American participation in the global capital market, had risen to 213% [5]. Similarly, in the past 15 years, foreign direct investment in the United States has increased five times. As a result, 5% of the labor force in the United States is currently employed in wholly foreign-owned or joint venture enterprises. During the same period, the US foreign direct investment also increased fourfold, so that the US, which accounted for less than one fifth of the global total direct investment 15 years ago, now accounts for nearly one third. In 1975, only 1% of the company's equity held by American investors was owned by foreign enterprises, and this proportion rose to 10% by the end of 1997. In 1970, the total import and export volume of the United States accounted for only 11% of its GDP. By the end of 1994, the proportion had reached 24%, an increase of 118%, far higher than the growth rates of 43% in France and 24% in Germany in the same period Stokes 1999)
the greater background of dollarization lies in the trend of increasing flexibility of economic sovereignty with globalization, and in the world's deeper understanding of monetary sovereignty. The creation of the euro and the European Central Bank is based on treaties between EU Member States. From the perspective of economics, the monetary sovereignty of each country was deprived with the establishment of euro. However, from the perspective of law, there is no necessary connection between the loss of independent monetary policy and the so-called "transfers of sovereignty". As long as the signing of international treaties or the choice of a government is entirely voluntary, the category of national sovereignty itself will not be interpreted as the transfer of sovereignty. This may sound contradictory, but in fact, the real embodiment of national sovereignty is that it can seek to maximize its overall interests by giving up part of its rights. It's just like indivials don't lose their sovereign status when they are bound by their own contracts On the other hand, in democratic countries, the definition of national sovereignty should be the citizens themselves. In a country like Canada, someone once estimated that if citizens were allowed to open bank accounts in their own currencies and pay taxes in any currency, most of them would not use "good" currency to pay taxes in order to maintain the national symbol and hold unstable "bad" currency Brenner (1999) concted an opinion poll in Mexico in the winter of 1998, and the result showed that 90% of the respondents agreed to accept the US dollar. If we recognize that the will of citizens is the ultimate source of sovereignty, then at least in some countries, people no longer regard money as a symbol of the country