An incentive-compatible suggestion for seigniorage sharing with dollarizing countries

Humpage, Owen F.

Discussion Paper

An incentive-compatible suggestion for seigniorage sharing with dollarizing countries

Abstract: Sixteen countries now treat the U.S. dollar as legal tender. Although dollarizing can help emerging-market countries gain monetary credibility and avoid currency crises, many do not want to give up the seigniorage revenues associated with issuing their own fiat currency. This article offers a proposal for seigniorage sharing.

Keywords: Dollar, American; Demand for money;