migration

Quote: Clinton State of Union address delivered January 24, 1995

The financial crisis in Mexico is a case in point. I know it's not popular to say it tonight, but we have to act, not for the Mexican people but for the sake of the millions of Americans whose livelihoods are tied to Mexico's wellbeing. If we want to secure American jobs, preserve American exports, safeguard America's borders, then we must pass the stabilization program and help to put Mexico back on track.

The proposed Mexican Stabilization Act of 1995 had nothing in it about border security. But President Clinton felt that unless the Mexican currency was stabilized, the mass shuttering of Mexican businesses would inevitably result in a crush of illegal immigration into the USA.

Illegal immigration in the 1990s was the highest of any decade before or after.

Quote: petroglyph

I could see nothing in the PDF as regards migration. There were however quite a few references to the Monetary stabilization act, I believe funded by the ESF, otherwise known as the PPT.

Quite a lot there on "dollarization". Not sure if you were offering that when dollars are allowed to be the common currency, if people should be allowed to cross borders as easily?

Once again the Monetary Stabilization Act would provide banknotes at a reasonable price to Latin American countries who desired to dollarize. The implication is that the increased opportunities to make long term loans and finance projects using a stable currency would provide more jobs in Latin America and reduce the drive to immigrate.

Any country can dollarize. Panama has been dollarized since it was created. El Salvador dollarized because there per inhabitant remittances from the USA is the highest in Latin America. Even though the exchange rate was stable, it simply was costing them too much to maintain a separate currency. Ecuador dollarized because they were suffering hyperinflation.

Bermudas, Bahamas, East Carribean Dollar region, Belize, Cayman Islands, and one of Cuba's currencies are all pegged to the USD, so while they have their own banknotes they are largely backed by US treasury bonds. Their banknotes are probably all printed in the USA or Canada.

But one of the major expenses of dollarization is banknotes must be acquired at full face value. The Monetary Stablization Act would reduce those costs by a significant amount so they are closer to production costs.

Quote: Pacomartin

But one of the major expenses of dollarization is banknotes must be acquired at full face value. The Monetary Stablization Act would reduce those costs by a significant amount so they are closer to production costs.

That doesn't sound feasible to me Paco because it is so open to abuse. I am the leader of some dollarized country and buy US$ at a deep discount. What is stopping me from selling them to someone out of the country at a secret small discounted price. The person I sell them to can now spend them in the US at full value.

Quote: kenarman

That doesn't sound feasible to me Paco because it is so open to abuse.

That is probably one of the reasons why the bill never went very far. They tried to build in some safeguards against money laundering drug money.

The most obvious thing is to provide banknotes appropriate to the economy. For instance, the largest native banknote in central American countries is
200 GTQ Guatemalan Quetzal = $25.7632 USD
500 HNL Honduran Lempira = $20.5381 USD
1,000 NIO Nicaraguan Cordoba = $30.6843 USD
100 BZD Belizean Dollar= $49.6204 USD
you would obviously not provide any $50 or $100 notes

Costa Rican is a stable country, and the largest banknotes of the colón are worth
50,000 CRC= $81.6527
20,000 CRC= $32.6611
so they would feel hindered by not having any $50 or $100 notes. But they are more likely to get them from tourists.

You could send banknotes with a specific set of serial numbers, but that will only catch cheating on a massive level.

The easiest path to dollarization that I can see is to develop a central bank digital currency CBDC and then just peg it to the dollar. But that might not inspire the confidence as most international businesses would be afraid the peg would simply be changed.