The linked news article (https://www.batimes.com.ar/news/argentina/mileis-policies-and-poll-numbers-spark-concern-in-argentina.phtml) about the Argentine dollarization proposal quotes a consultancy warning about the following:

> If the market perceives that Milei has any chance of governing, it is most likely that we will see a run against the peso. It could even generate a sort of self-fulfilling prophecy, with peso-holders fearing dollarisation and trying to get rid of their holdings, [thus] creating the conditions for this dollarisation.

What makes this a plausible risk for Argentine dollarization, but not Caribbean dollarization? Or is it a plausible risk for both? Or neither?

By the way, the St. Martin map is probably the only map in existence using 'baie', 'bay', and 'baai' in the names of three adjacent locations.

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It is not a justified concern in that if you are dollarizing you do want people to transition to dollars. So that is an odd framing. We know from the experiences of Ecuador and El Salvador that bank deposits actually went up approaching and after dollarization (I will discuss this in more detail in future parts of this series). People were not fearing dollarization they were leaning into it - which is a good thing.

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Just a note: The de facto currency of St. Maarten is the USD. While a few shops on St. Maarten list prices in Netherlands Antilles Guilders, most do not, whereas everywhere in Dutch St. Maarten lists prices in USD. Many businesses will not accept NAf as a form of payment, and the ones that do are still real confused if someone tries to pay in guilders. This is the case even though cash transactions are still very common on St. Maarten.

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May 20, 2023Liked by Rasheed Griffith

> For centuries Spanish money was universally accepted in the Americas - the first universal New World currency before the British Sterling and long before the U.S. Dollar became a significant player.

Indeed, my schoolbooks said that the US dollar was originally a duplicate of the Spanish trade dollar/thaler. They didn't say why, but probably it wasn't the pound just to spite Britain. In any case, my brother had a beautiful silver Mexican peso (their clone of the Spanish dollar) of the mid-1900s, which was exactly the same size as the US silver dollar of that era.

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Thank you very much for the piece; I look forward to reading the upcoming parts!

I have a question I hope you might be able to answer. But first a bit of context- you mention El Salvador as an example for an already dollarized country. I have a coworker from El Salvador and mentioned dollarization to him and he was very much against it. Apparently although El Salvador has dollarized, it is still legal to pay wage laborers in Colons. However, everything in the country is priced in dollars and it’s hard to change Colons to dollars because no one, including banks, actually wants this currency even though the exchange rate is fixed at 8 to 1. This seems to defeat the whole purpose of dollarizing as you describe it. Any idea why El Salvador has chosen to do this? In practice it seems worse than adopting fixed exchange rate and maintaining an independent currency.

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