Dollarization refers to:
A) increased trade with the United States, resulting in a glut of dollars circulating in the domestic economy.
B) the fall of the U.S. dollar.
C) the dominance of the U.S. dollar in international finance.
D) the adoption of any foreign currency as an official currency by nations outside the United States, such as El Salvador and Ecuador.

Question

Quizplus · Accepted Answer

Dollarization specifically refers to the adoption of the U.S. dollar (or any foreign currency, but typically the dollar due to its global standing) by another country as its official currency. This can be for stability reasons, to combat hyperinflation, or to integrate more closely with the global economy. El Salvador and Ecuador are examples of countries that have adopted the U.S. dollar as their official currency.

Dollarization Refers To