Dollarization And Menger 's Theory Of The Origin Of Money Essay

1938 Words8 Pages
ABSTRACT. Dollarization has become a common practice throughout the world. This essay aims to show the similarities between dollarization and Menger’s theory of the origin of money. Menger’s paper, On the Origin of Money, is the main focus of the explanation of this topic. His theory explains that money originated because of the need for protection against inflation and an easier way to trade. This paper makes use of several publications in an effort to build an argument that proves widespread dollarization has occurred for the same reasons as the origin of money and reveals the likely development of the dollar as the single global currency.

INTRODUCTION. As countries battle high inflation and decreasing GDP, they have looked for solutions to these serious issues. One such solution has experienced great success, dollarization. The success of this practice could lead to global dollarization, creating a global currency. This paper will explain why many countries have adopted the U.S. dollar as their national currency and explain why the dollar might become the single global currency, focusing on the similarities between Menger’s theory of the origin of money and dollarization.
LITERATURE REVIEW. Berg examines the cost and benefits of dollarization compared to its closest alternative, a currency board. This relates to the thesis by explaining the benefits of dollarization that explain why dollarization is occurring. Quispe-Agnoli explains the costs and

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