According to the last count, there are seven countries that have jettisoned their national currency and adopted the American dollar as their legal tender. There are also four countries that have adopted the euro as their currency. These are examples of complete dollarization or euroization. Closer to home, Panama and El Salvador of Central America, are two examples of complete dollarization. Two examples of complete euroization are Kosovo and Montenegro.
There are, however, examples of partial dollarization where a national currency exists side by side with the dollar. In a regime of partial dollarization, the dollar encroaches on some functions of the national currency’s roles. We do not need to go far as there are several instances of partial dollarization and encroachment in the Caribbean. For example, Jamaica allows its nationals to save and borrow US dollars from the local commercial banks, merchant banks and building societies. As at April of 2023, the total US dollar loans in Jamaica amounted to $1.58 billion while the total amount saved is $4.47 billion. These numbers indicate that many Jamaicans save in US dollars in order to hedge against persistent structural depreciation of the J$. Moreover, when Jamaicans save at home in American dollar bank accounts that currency is replacing a slice of the store-of-value function of the Jamaican dollar