ONE ECONOMY TO RULE THEM ALL:

Implementing dollarization in Argentina may be a formidable undertaking, but it is far from impossible. Argentina needs approximately $6 billion over several months to manage currency exchanges, and even less if it takes a voluntary approach. Argentina would certainly be able to secure $6 billion if a new government were to introduce a credible set of reforms. 

Dollarization has arguably never been cheaper for Argentina than it is today because much of the cost has already been incurred. Individuals and businesses have converted many pesos to dollars on their own. Official dollarization would largely formalize the informal dollarization that has already occurred. 

To be consistent, dollarization critics should be more concerned about alternative stabilization plans designed to salvage the peso. These reforms, which would necessitate some form of exchange rate controls, would likely require even more dollars than dollarization. If Argentina lacks the resources for dollarization, it most certainly does not possess the means to rescue the peso. The alternative is to continue on the current course, and approach dollarization under circumstances akin to Zimbabwe rather than the more successful experience of Ecuador. Dollarization not only provides the most cost-effective escape from Argentina's monetary quagmire, but also presents the reform with the highest prospects of long-term success.

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