A CFR Book. Yale University Press
Why should a developing country surrender its power to create money by adopting an international currency as its own? This comprehensive book explores the currency problems that developing countries face and offers sound, practical advice for policymakers on how to deal with them. Manuel Hinds, who has extensive experience in real-world economic policymaking, challenges the myths that surround domestic currencies and shows the clear rationality for dollarization or the use of a standard international currency.
The book opens with an entertaining story of the devil, who, through a series of common macroeconomic maneuvers, coaches the president of a mythical country into financial ruin. This ruler's path is not unlike that taken in several real developing countries, to their detriment. Hinds goes on to introduce new ways of thinking about financial systems and monetary behavior in Third World countries.
"Dollarization as a policy idea is much more discussed than tested. Manuel Hinds has helped put it to the test in El Salvador with some impressive results. This book makes a powerful argument: It should be read by all who wish to act or opine on the critical question of whether one country, one currency is right for the twenty-first century."
—Lawrence Summers, former Secretary of the Treasury of the United States and President of Harvard University
"In this remarkably lucid and fun book, Manuel Hinds explodes any remaining myths about the need for most countries to maintain their own currencies. For a watertight explanation of how and why dollarization makes eminent sense, one couldn't do better than read this book."
—Robert Litan, Vice President for Research and Policy at the Kauffman Foundation, Senior Fellow at the Brookings Institution, and coauthor of Financial Statecraft
Manuel Hinds is a consultant to international institutions and governments on issues related to the financial system. He was chief adviser to the president of El Salvador on the dollarization of the country in 2000-2001. He was also the Whitney H. Shepardson fellow at the Council on Foreign Relations from 2004 to 2005. He has served as minister of finance in El Salvador twice—from 1979 to 1980 and from 1995 to 1999.