No Nocturnal Erections

MONETARY SOVEREIGNTY OF DEP UNDER STRUCTURAL ADJUSTMENT

monetary sovereignty of developing countries under the IMF's NOT

As noted by Edwin Heron [2008, p.119]: "the power of the Fed is having could be Keynesian in 1970, monetarist after 1979, original with Greenspan and may be new Keynesian with Bernanke without having to change its institutional framework. "This phrase sums up the meaning of a responsible central bank in a sovereign country and can be monetarily considered standard for analyzing the dynamics and effectiveness of sovereignty currency of a country. How far then
cooperation with BWI question the monetary sovereignty of developing countries undergoing adjustment? Cooperation agreements with the Bretton Woods Institutions (BWI) they affect significantly the sovereignty and monetary management of adjusting countries? Those are the two central issues that need to be asked here.
is known, the focus of relations with BWI conditionalities that are consistent negotiations with Member States in need of funding. If in the general framework, the IMF is required to enforce macroeconomic balance via a sharp framing of criteria to be met, the World Bank is traditionally held to finance development in all its dimensions with mixed results that are already known. Next to fiscal discipline, liberalization measures and other criteria in the ten commandments of the Washington Consensus, the monetary tightening that is among the criteria stars Structural Adjustment Policy (SAP). The IMF in particular makes this test a strict dogma. In all negotiations with Member States, the model of the Monetary Approach to Balance of Payments (PBMA) Polak [1957] is the reference model of the IMF. This model takes into account the primary objective of monetary tightening to prevent slippage of an inflationary monetary policy expansionary. Two schools have more influence on the IMF in recent years: New Classical Economics (NEC) and the New Economy Policy (NEP). Among the leaders of the son of the NEC, quoting J Barro [1974, 1983], Robert Lucas [ 1995], Kydland and Prescott [1977]. Among the main proposals of this approach, there is first the hypothesis of rational expectations but Lucas also time inconsistency of discretionary policies strongly developed by Kydland and Edward Prescott [1977], which earned them the Nobel Prize in 2004. This approach comes in the wake of Friedman's monetarism, which states that "inflation is everywhere a monetary phenomenon." J Barro and David Gordon [ 1983] have subsequently refined this approach introducing the "concept of the central bank's reputation," which is to incorporate inflation expectations in the analysis. NEP among economists recognized it as Ann Krueger [1993.2002] or the proponents of public choice which includes Buchanan, Tollison and Gordon Tullock [1980]. This trend highlights the reading of the political environment in which fits the requirements of the Fund adopts a functionalist conception of the state. Questioning the effectiveness of government policy in monetary management is the main argument of the monetarists, NEC, among which are derived NEP key IMF officials. As early as 1985, Rogoff has developed the theory of "strategic delegation" which encourages giving more independence to the central bank. The independence of the central bank appears to Rogoff optimal solution to deter politicians from the political and monetary control by the objective of price stability. It is quite normal as we see a strict rule of monetary tightening in the negotiating framework of IMF programs. Stand By agreement of the SBA or emerging countries in SAF, ESAF and PRGF poor countries, there is no mention of leaving the monetary tightening. The control of inflation remains in fact the main objective of banks central adjusting countries at the expense of growth. In the eyes of the technicians of the IMF, obviously inspired monetarist, there is no question of adopting any form of monetary stimulus on pain of fueling inflation. It is a radical position in which No negotiation is possible. In this case, despite the central bank independence stipulated by its statute aims primarily the fight against inflation, leaving aside any sort of adjustment considered capital in the conduct of a real responsible economic policy but not a passive economic policy that characterizes these countries because of the conditionalities of SAPs. With reference to Article IV of the IMF, Michel Lelart [2007, p.73] summarizes in a synthetic way the constraints on developing countries as part of the PAS: "Each country will endeavor to direct its policy ... economic, it must not only direct but try to do so, each country will seek to promote stability ... it should not promote it but only seek to do so, finally, each country will avoid handling rates ... exchange, it is not forbidden him to manipulate the exchange rate, he need only avoid doing so. "In Africa, as in emerging countries, the IMF has always been present in the framing of monetary policy. Financial Programming (including money) of adjusting countries must have the endorsement of the IMF if the subsequent release of funds and related programs could be suspended. Still, in many countries, the IMF does not hesitate to interfere directly in their monetary management. The IMF Article IV states that a country may choose to define and stabilize its currency against the SDR to another currency to a basket of currencies or float more or less freely. It requires only that its policy is consistent with the objectives of the Fund. The only limitation is the strict prohibition of any reference to gold. Once the choice is made, a country should stick to and implement the system chosen. [Ibid, p.72]. The status of the IMF then gives some leeway to member countries in of monetary or exchange rate regime. But it must at the same time exercising firm surveillance over exchange rate policies of member states, which justifies its regular intervention in the choice of exchange rate regimes in developing countries. One of the provisions of Article IV adopted by the directors April 29, 1979 states: "A member shall avoid manipulating exchange rates ... to prevent the actual adjustment in its balance of payments or to gain an unfair competitive advantage over d other members. "[Ibid, p.76]. This point shows how cooperation with the IMF calls into question the monetary sovereignty of the countries under adjustment. Despite the freedom of choice of monetary and exchange rate regime that gives them status IV, another section of it contradicts what is depriving developing countries of the monetary adjustment that is needed at some point. It thus measures imposed by successive devaluations of the 1980s and 1990s but also those of recent years in African countries, Latin America, the change of regime change just at the request of the IMF, changes in equity in emerging markets. Following the example of Madagascar, the policies of successive devaluations contrary to the arguments of the IMF could not bring fruit. The sharp depreciation Malagasy Franc (FMG) of the order of 4000% from 1973 (the date on which Madagascar left the Franc Zone) in 2008 reflects the slip recess of monetary policy applied by leaders who have succeeded but there are also a large share of responsibility under regular IMF monetary policy applied. Impairments successive FMG from Shadow Program 1994 (IMF requirement that Madagascar spends at a fixed exchange floating exchange) is a concrete example.
monetary sovereignty of developing countries is then questioned in connection with the PAS.L independence of the central bank hides another well-established reality: interference Monetary Fund. This interference monetary challenges not only the actual independence of the central bank but also and especially monetary sovereignty. Many developing countries suffer as well as adjustment of a "disguised monetary sovereignty" to the detriment of their development. But is there a credible alternative approach that strengthens the monetary sovereignty of developing countries? Heterodox economists, Keynesians, Post-Keynesians, Marxists, regulation school or institutionalist all remain committed to controlling all instruments of economic policy by the government to allow greater effectiveness and legitimacy [Heron, 2008 p.116]. Apart from New Keynesians (who think like the neoclassical including NEC and long term money is neutral), the heterodox are not a passive policy of the central bank places great importance on targeting inflation as was the case since 1990 in much of central banks. If their design and their theoretical foundations differ from the other, the ultimate objective of their analysis is the increased flexibility of the central bank therefore its ability to act. Among the various lines of thought we can move forward here, the post-Keynesian monetary analysis is shown in the foreground.
The extension of the work founder of JM Keynes [1930, 1936] follows a considerable expansion of the monetary analysis of his disciples. Keynes to face the crises of the thirties has crossed the Great Britain called expansionary monetary policy in which the central bank independence is a central figure. In his view, the interference of policy maker (politicians) in monetary management may cancel the expected effects of a stimulus so it is vital that the central bank has a real independence. The purpose of the argument of Keynes has always been the revival of economic activity in a context marked by depression. Today, the situation was reversed, the central bank independence is imposed across the DCs to avoid skidding inflationary so dear to the followers of Friedman and the Liberals. The defense of the independence of the central bank n is more so like the days of Keynes. This independence is here today, driven monetarist precepts for maximum curb inflation, which is considered as everywhere a monetary phenomenon, while the time of Keynes has been advocated for a monetary stimulus. The separation of power between political power and the central bank is not based Keynesians. Through the endogenous theory of money, most Post-Keynesians advocate a central bank active rather than passive fit to face the challenges of Recovery and adjustment of monetary economics. Obviously with the support of public power, this option is considered an essential condition for a monetary sovereignty effective both in developing countries than in developed countries.
post-Keynesian monetary theory is essentially based on the endogeneity of money supply. The American Post-Keynesians [Kregel, Randall Wray, Arestis, Dow], the French Post-Keynesians circuit
[Piegay, Rochon, Poulon, Parguez] the Post-Keynesians English [Godley, Kaldor Deleplace, Nell], the Canadian post-Keynesian [Marc Lavoie, Gilles Dostaler] agree that the said money supply can not be fixed in an arbitrary manner by the central bank. It is determined by the credit application and public preferences. This is the famous aphorism that
"Appropriations are deposits," notes Marc Lavoie [2004, p.55] in his work entitled "The post-Keynesian economics." Theory Post Keynesian Monetary reverse causality direction among deposit-credit neoclassical. The banks did not necessarily require advance deposits to extend credit. The creation of credit and bank deposits are made solely on the basis of credibility and security offered by the borrower [Heinsonhn and Steiger, 2000]. The currency bank as central bank money is endogenous and can be set arbitrarily by the central bank. The volume of central bank money is tied to loans granted to bank money and a divider credit. Bank money is not a multiple of the amount of central bank money is the central bank money which is a quotient of the quantity of bank money. A major argument that supports the reverse causality from credit-deposit the Post-Keynesians is that they refute the theory wickselienne loanable funds that the new Keynesians [Stiglitz, Mankiw, Tobin] accept like of neoclassical. The Post-Keynesians argue that unlike the neoclassical investment that is induced savings and not vice versa. Just then the mobilization of domestic resources for financing the activity depends only on the credibility of the borrower and financial standards in existence. The scarcity of funding is conventional [Lavoie, 2004, p .55]. In this context, they refute the existence of a natural rate of interest and inflation can be caused by a growth rate of money instead it is the growth rate of prices and production will cause the increase in the stock of money. The endogenous theory of money attaches great importance between money supply and the production process. It is in this sense that the post-Keynesian monetary theory is regularly equated to a "monetary economy of production" or "Economy of the monetary circuit." Under the practice of monetary policy, the endogeneity of the currency leads to a fundamental character currency on which the main argument of Post-Keynesians face of virulent attacks neoclassical: the "non-neutrality of money." The Post-Keynesians do not see in the independence of central banks in an attempt to impose a neo-classical dichotomous view of the economy between monetary phenomena, such as inflation would fall within the central bank and real phenomena that fall within the market [The Heron 2008, p .117]. For the Keynesians, the money is not neutral since it acts by the credit and the interest rate on output and employment. The unrealistic assumption of rational expectations shows that economic agents do not take into account the long-term horizon as a result, any decision to raise or discipline adopted by the central bank will be incorporated into consumer habits and local investment. Edwin Le Heron [2008] shows that the monetary policy of NEC inspired Friedman's monetarism can be summarized through the theory of central bank credibility. This credibility can be measured through the rate of achievement of the target set that is other than controlling inflation. To Edwin Heron [Ibid, p.116], the two basic theoretical assumptions of independence of central banks: the inflationary bias and rational expectations are contrary to the facts and are now widely questioned. The position of Maurice Allais [1993] also converges in the direction of building a truly state responsible for its monetary policy like the Post-Keynesians. Maurice Allais [1993, p.323] argues: "If we consider not only the history of recent decades, but these past two centuries, and probably that of those who preceded them, monetary factors appear certainly as being of quite exceptional in the functioning of any economy. If, indeed, monetary conditions appropriate measures are not insured, experience shows that there can be neither economic efficiency nor fairness in the distribution of income. "
For all these reasons mentioned above, the cult of price stability, the main objective of central banks in developing countries undergoing adjustment does not necessarily mean the development challenge in developing countries. The principle of independence of central bank policy-source passive monetary should be then replaced by a central bank able to actively cope with the major problem in developing countries: stagnation. In such cases, the monetary sovereignty of the country should no longer be questioning which strengthens the credibility and effectiveness of action by the central bank. It is time that the developing countries change course under penalty of swimming in a sort of "submission monetary chronicle" that has characterized it for decades.
China, a country that has never had a relationship with the BWI in particular the IMF deserves to be noted here. The Chinese like the major developed countries has always had its way with its monetary policy. China's economic performance and stability of its currency has never been questioned so far. On the contrary, its monetary sovereignty vis-à-vis the outside is one of the central pieces of its economic takeoff. It is also oil-producing countries of the Middle East. Despite the requirement and the frequent criticisms of the United States and Europe who accuse the Chinese authorities have consistently applied a policy of dumping money by undervaluing the yuan (Chinese currency), China is still far to conduct its monetary policy at will. Monetary sovereignty of China just like the oil countries of the Middle East has never been questioned. On the one hand, they have not had sex sustainable with the BWI (or no). On the other hand, their financial situation allowed them to have an independent monetary policy without much depend on the outside. In all, their monetary sovereignty reinforces the credibility of monetary policy the central bank. But in reality, the direction of causality between the credibility of the monetary policy of central banks and monetary sovereignty remains unresolved.
1-2 3-Sovereignty and credibility of the Central Bank: what relationship?

A question arises: is there a causal relationship between monetary sovereignty and credibility of monetary policy the central bank?
That is what monetary sovereignty above and influence the credibility of the central bank or the reverse? The first case leads to say that the efficiency of monetary policy is primarily the result of the existence of a certain monetary sovereignty deemed essential in the conduct of all monetary and financial reforms envisaged to ensure financial independence. In this sense, the aforementioned conditions that are consistent monetary sovereignty must be met fully or partially . Conditions which state attributes for strikes and money creation, institutional capacity. This scenario can be envisaged in case of major industrialized countries like the United States, major European countries currently a member of the area Euro, Great Britain, Japan, some Middle Eastern oil countries and China. These countries have all their monetary sovereignty in the broadest sense which allowed despite the tensions that have weighed on their economy at a certain time to carry out monetary policy through their respective central bank. For cons, the second case shows that the credibility monetary policy the central bank is a sin qua non condition to achieve monetary sovereignty. No monetary sovereignty may not be so considered without this credibility. But how credible is this here? The credibility of monetary policy the central bank is usually defined as the ability of monetary authorities to impose monetary policy vis-à-vis the objectives required in the general framework of monetary policy at some point. Alternatively, the power of the central bank to respect and uphold its objectives . Questions follow each other to illuminate this debate. The central bank can influence money market as stipulated in its status? Happens to really master the key variables in the economy? To what extent a relaxation of the base rate of the central bank can influence the rate of primary second-tier banks? The manipulation of reserve requirements can really influence the behavior of banks relative to their credit policy? The answers to these questions can be found by analyzing the transmission mechanism of monetary policy but the credibility of the central bank is a parameter not to be overlooked in the analysis. Credibility resulting from the combination of two factors namely the merits of monetary policy and the jurisdiction of the monetary authorities. These are mainly cases of emerging Asia and Latin America, African countries. Some of them have been reforming their financial sector and monetary policy with or without assistance of Bretton Woods. As countries such as Malaysia, South Korea, South Africa. The other emerging or not are always looking for the magic potion to enable them to strengthen the credibility of their central bank in the conduct their monetary policy.
It is quite difficult then to decide on this issue brings monetary sovereignty Does the credibility of the central bank or the opposite? Can we move forward, the goal of all monetary and financial reform is the economic takeoff and the betterment of the people who will necessarily pass through economic growth without neglecting the human dimensions of the economy. Logically, sovereignty and credibility can go together but it is vital that sovereignty above credibility because the credibility of the central bank may be fleeting if the country in question did not really its own monetary sovereignty. Emerging Latin American and Asian victims of financial crises of the 1990s and recent years are examples in this regard.
monetary sovereignty for most developing countries remains a utopia they begin to undertake appropriate monetary reforms to reach this stage in order to assert their independence. Reforms that require projections primarily solid and consistent throughout but not blindly reforms that have predominated since the 1980s in these countries.
As demonstrated above, the post-Keynesian monetary theory offers a promising alternative for developing countries as a whole can recover their monetary sovereignty long scorned by the PAS and the global monetary asymmetry. In any event, the search for optimal monetary regimes in developing countries depends on two things: i) the willingness or otherwise of these countries take ownership of their monetary sovereignty, ii) the different economic structures and economic conditions of each country . The key then is not having monetary sovereignty but to master the challenges resulting whose monetary stabilization (which is not always the case) and use of flexibilities it offers potential in the conduct of monetary policy really responsible.

Difference Grand Touring

PERSPECTIVE OF THE RECENT MONETARY SOVEREIGNTY OF DEP

For sicècles and today, the monetary sphere is a fundamental branch of the recurrent financial crises économie.Les emerging in the 1990s and subsequent years but also the financial vulnerability of LDCs shows how the monetary regime in developing countries is the core of their financial systems. This article emphasizes the sovereignty Monetary DCs in a recent perspective. I apologize to the imperfections of this article both in the form in the fund. Happy reading!

RECENT PERSPECTIVE OF THE SOVEREIGNTY OF MONETARY PED
The International Monetary System (IMS) today as the post-war is marked by a strong dominance of the U.S. dollar. The hegemony of the dollar is evident despite the malfunction has crossed the U.S. economy. The U.S. with its currency remain the heart of the SMI, while the other side, there is essentially composed of the periphery Developing countries (emerging, and PMA) and other industrialized countries. Post-Keynesians whose authors Arestis et all [2005] in the Journal of Post-Keynesian Economics highlighted the continuity and sustainability of such a system. A key finding of this study is the creation of an international currency and a clearing house responsible for ensuring the adjustment of imbalances central banks [Keynes, 1944]. As was summed Lelart Michel [2007 , p.22-24]: "On the technical side, the Keynes Plan is a compensation mechanism, the financial credit is a procedure On the political front is the guarantee of a real symmetry. "If the implementation or feasibility of this plan remains pending, the domination of countries with strong currencies (the U.S., the euro area) countries on weak currency (DCs) are obvious. The growing imbalance of financial and monetary global regularly leads to a kind of asymmetric monetary SMI reflecting the progressive loss or total monetary sovereignty of developing countries. The real effectiveness of monetary sovereignty can be understood through their monetary regime and exchange rate regime.

1-Questioning of monetary sovereignty: asymmetric monetary

The monetary sovereignty is a very broad concept and difficult to grasp. Despite the multitudes of studies relating to money made by economic theorists and / or practitioners, this concept remains poorly exploited even if these studies there in most cases treat the subject in one way or another. Generally, "the sovereignty of a State is the quality of the state of being obligated or committed by its own willingness within the overarching principle of law and pursuant to the collective goal that is expected to achieve "[Le Fur, 1896]. For simplicity in this study, monetary sovereignty is defined as" the ability of a country to conduct out monetary policy without having one way or another, the interference of other countries or organizations outside the monetary system in question and does not undermine the sovereignty of the nation. " This definition brings different perspectives to monetary developing countries that have largely changed during the last two decades . It is true of studies on the exchange rate regime, the monetary zone, the dollarization, currency board. These multifaceted variants of the monetary economy always involve the concept of monetary sovereignty but to different degrees. In all cases, arbitration and the balance of power between the heart currency (dollar and euro) and periphery (the currency of the DCs) constitutes the main determinants of monetary sovereignty of developing countries. If on the monetary front, the U.S. and the euro area does not suffer from limitations of monetary sovereignty, most developing countries will suffer a lot and is regularly one way or another, the hegemony of hard currencies including the dollar, the euro and the yen. This imbalance in the relationship between money center and the periphery is regularly called "Asymmetric monetary policy 'which is the most visible form of" money quote "in developing countries vis-à-vis core countries including the United States.
Referring to the previous definition, the ability of a government (or monetary authority) to deal freely, without constraint or external dependency of the monetary instrument can be described as sovereignty Money, a variant of the nature and degree of financial dependency vis-à-vis the outside. A nation that issues its own currency is at least partially sovereign. We are talking about "de facto monetary sovereignty." However, the ability to issue currency (and related instruments) is not the only form of monetary sovereignty. Thus there are countries which have their own currency, its own central bank but are actually forced to use foreign currencies to stabilize their currency or economy (currency board, dollarization). It is important to recall that between one fully sovereign state and a State which is not the point, there is an infinity of imperfect monetary sovereignty. The definition chartalisme currency implies a fully sovereign monetary authority can play without undue influence on the valuation of the monetary instrument [Knapp, 1973 and Schumpeter, 2004]. In other words, the credit that users give money to the sender that determines its value. Unlike chartalisme, the "theoretical metallism" denies any role in the issuing institution in the establishment of conditions for recovery of instrument money. For this current, the currency has no intrinsic value or the value derived that gives the issuing institution. It is only by the associated security, that is to say, for example, a certain amount of metal or a coin. The existence of original sin [Eichengereen, 1999] or the dollarization of debts is a concrete example. Modern translation of currency is the currency sovereign and obeys a definition chartaliste. Its value is conferred by the issuing institution as well. However, the more credit decreases, the "metallic practice" is necessary to restore a sufficient recovery of the national currency. Economic power is local and is obliged to restrict its monetary sovereignty even if it still has certain prerogatives. The assembled and the accumulation of monetary sovereignty restrictions constraints lead the countries that suffer in the periphery money, that is to say in a kind of dependence vis-à-vis one or several currencies whose representative dollar, the euro and the yen. This is undoubtedly the tangible evidence of the asymmetry between the monetary core countries and developing countries shows that recess gradual or total loss their monetary sovereignty. Dollarization and the CFA franc zone are examples of formal.
2-Dollarization challenges the monetary sovereignty of developing countries

Here, initially, as a first step, we will discuss the relationship between dollarization and monetary sovereignty. Then, the stylized facts of dollarization will corroborate our hypothesis that the dollarization challenges the monetary sovereignty of developing countries.
2-1-Dollarization and monetary sovereignty: what relationship?

Dollarization is a monetary policy instrument very popular in Latin America to the early 1980 and has grown into the 1990s before expanding later to other countries in Asia and Africa. This term has become familiar in the circle of economists in recent times and is even a burning topic in conferences, seminars and economic studies. Strictly speaking, dollarization means "abandonment of a national currency in favor of the U.S. dollar." Salama [1998, p.8] defines dollarization as "the evolution that the dollar is becoming more and more as a store of value, unit of account and medium of exchange sometimes for certain products . Bourguinat Dohn and [2002, p.59] reformulate a definition because the neighbor designate as "the process of replacing the dollar of the United States of existing national currencies as a unit pricing of goods, payment instrument and possession of savings. "In the broadest sense, dollarization can be defined as" a system under which a country gives up completely or partially to use its own currency and adopt as legal means or through payment of a stable world currency (the dollar, the euro). Several types of dollarization can be considered following the penetration, usage and formalization of the currency in question in the country concerned. We can distinguish full dollarization and official dollarization partial and unofficial. The full and official dollarization is considered a process of substitution of foreign currency to domestic currency, it is then the substitution patterns that are favored as tools analysis. Dollarization partial and unofficial about it articulate reflection on the analysis of cost / benefits of the decision to melt down the national currency in favor of a foreign currency [Ponsot, 2003]. Whether you are in a regime of full or partial dollarization, monetary sovereignty of the country is at stake here is not a question then arises what system support but how and to what extent dollarization calls into question the dollarized monetary sovereignty of the country. If
official dollarization and full through the abandonment of monetary similar exclusivity as a total loss of monetary sovereignty of the country concerned, the de facto dollarization and partial results in a crisis of legitimacy of the unit of account gradually eroding domestic monetary sovereignty. The functional analysis of the currency which favors the approach in terms of asset substitution and currency substitution can know the degree of dollarization of an economy while the institutional approach, which highlights his identity that characterizes a country or any region refers to the concept of monetary sovereignty. In this study, the institutional approach (chartaliste) is put forward without forgetting the contributions of the functionalist approach.
Dollarization is a phenomenon that dates back over a century. Indeed, until recently, only one of Panama countries of significant size in 1904 had opted for dollarization. However, Ecuador and East Timor in 2000, El Salvador in 2001 chose to turn the U.S. currency as payment on their territory, thus waiving any monetary sovereignty. Nicaragua and Costa Rica could be seduced into a more or less near future. If Argentina has been reluctant to take the plunge with much hesitation, we note that there is a double movement including the dollar in Guatemala [Minda, 2005]. This amplification of the full dollarization reflects the concern of Latin American leaders to stabilize their currencies after the severe financial crises that characterize the 1990s. The adoption of a plan of complete dollarization is a choice fraught with consequences. The abandonment of national currencies in favor of a foreign currency is almost irreversible, if not a choice requires a long process of de-dollarization. As noted by Minda [2005]: "How much money independent countries regained their legal tender after losing legal tender? Apart from the dollar zone in Liberia, Botswana and Swaziland in the rand zone, the example does not abound.
If in the past, most studies on this monetary regime have turned to the partial dollarization, questioning the regime of full dollarization begins to grow in recent years. This shift has taken place in the context of searching for "corner solutions" or "corner solutions" that begins to grow after successive financial crises of the 1990s in emerging markets in Latin America which and Southeast Asia were the main victims. Many eminent economists have tried to break with the so-called intermediate regimes. Between choice of a free floating and anchored all, they preferred to adopt another plan that is the total or full dollarization supposedly able to stem the currency instability in these countries.
A crucial question that needs to be asked is whether and full dollarization is an optimal currency regime for monetary stability and reviving the economy of Latin America in particular and developing countries as a whole?
Weigh the pros and cons of dollarization is not easy. Proponents of dollarization highlight the following benefits: Credibility strengthened government responses to currency crises and hence lower interest rates by reducing the risk premium, reducing inflation and lower transaction costs resulting in greater trade integration, financial and tax; discontinuing funding by creating money which helps the banking sector, better prevention of debt crises, deepening of financial systems. In any case, dollarization is considered a source of monetary and financial stability of the dollarized country. Countries that have trade and financial narrow with the United States are the first group of countries should be fully dollarized. Panama is a concrete example. The second group of countries that suffer from a major political disorder such as Ecuador and El Salvador, Timor and countries in decomposition.
Opponents of dollarization turn their objection on five types of arguments: the loss of independence of monetary policy, abandoning the policy change, loss of seigniorage, loss of LLR and Limitations counter-cyclical instruments. Here is the loss of monetary sovereignty is at stake Dollarization is perceived here as a symptom of profound malaise, the loss of legitimacy of the domestic currency. It is the crisis of institutional currency and monetary sovereignty is evil. As noted Théret [1998, p.27]: "Money is a powerful symbol of belonging to a single political entity, economic and social." To Anderson [1991]: "It is a vehicle for identification in an imagined community as well as the flag, emblems, language, anthem, etc.. The symbolic dimension of the currency and identity requires that it be before any unit of account and more specifically single unit of account. Keynes [1930] and Knapp are the authors of the first half of the twentieth century, which focused on "the primacy of the unit of account." This concept is now largely developed by the authors in particular the Post-Keynesians 'neo-chartaliste Wray or one that emphasizes issues of monetary sovereignty. From the first line of his treatise on money [1930], Keynes explained that the unit of account (money of account), ie ie in which the debts, prices, and the general purchasing power are expressed is the primary concept of the theory of money [Keynes, 1971, p. 3]. Dollarization causes a detachment of the unit of account by domestic economic agents. As Affirms
Aglietta [2001]: "A viable monetary regime depends on the persistence over time of the confidence placed in the unit of account and its stability is the key point of that trust." In short, as the case (partial or full dollarization), dollarisation deprives countries of their dollarized monetary autonomy and / or their exclusive monetary attributes that are essential to the monetary sovereignty of a State.
In a regime of full dollarization, these situations must be discussed then verified, while in a system of partial dollarization, they will be accomplished partly in the case arises. To return to our sheep, it must be remembered that it is extremely difficult to make an objective assessment of benefits and costs of full dollarization. On the one hand, Panama is the only country that officially has a long experience in dollarization (since 1904). In addition, the link more closely the country and the United States skews any attempt to analyze in terms of cost-benefit. On the other hand, experience Recent officially dollarized countries like Ecuador [1999] El Salvador [2001], Timor [2000] do not really have a broad vision for a real understanding of this phenomenon. In any event, evaluation of benefits and costs of full dollarization requires consideration of economic, social and political candidate countries. However, it is important to note that despite the benefits of full dollarization, this currency regime should not be adopted as a last resort. The use of the dollar for the real and financial transactions is often reaction of the citizens or government of a country to instability of the national currency. Despite the monetary stability it brings, dollarization can make the financial system more vulnerable to crises of liquidity and solvency and especially the source of the loss of monetary sovereignty of that country. In a dollarized country, the loss of monetary sovereignty deprives the monetary authorities to adopt alternative measures to external shocks, not to mention the monetary loss of identity seen as a strong symbol of a modern sovereign state [Théret, 2003]. The dollarization promotes then the financial dependence of the country issuing country xénomonnaie (the dollar).
Due to its opportunity cost, the abandonment of a domestic currency for foreign currency is a last resort solution to financial instability and monetary policy in Latin America. Despite some specific advantages, it is unrealistic to consider the monetary regime as a miracle to reduce currency volatility in emerging countries and in addition to SMI. Passive management of the dollar by U.S. authorities corroborates this finding. Partial dollarization in developing countries in particular emerging markets (which is a fact for many countries) is inevitable for the U.S. dollar hegemony and economic power of the United States. The limit of sustainability of the U.S. twin deficits (since 2000) is the other side a harbinger of the risks of dollarization. Managing the dollar by the Fed with the ensuing consequences will not be enough to limit the damage of a full dollarization in countries wishing to apply. Especially since the Fed has never agreed to cooperate to mitigate the disastrous effects of dollarization in countries dollarized. Still, the new configuration of the SMI, the result of the current financial crisis does not allow the United States to behave as before.

2-2-stylized facts of dollarization: dollarization partial
Apprehension of dollarization can be analyzed on two levels: full dollarization and partial dollarization. While in most cases, full dollarization is treated official dollarization and de jure partial dollarization in turn refers to the informal and de facto dollarization. In fact, this definition can be thwarted by the practices and realities quite different from what we think or what you believe. In what follows, the partial dollarization will be put forward for the importance of this monetary regime in many developing countries. Full dollarization will be left aside since there are a limited number of countries including Panama, Ecuador, El Salvador, Guatemala, East Timor, who have passed. In addition, the monetary sovereignty of these countries is already completely flouted by the regime. Then we no longer see the advantage of placing too much importance to the currency regime more that this question is almost treated before.
partial dollarization refers to a functional approach of money (Money Is What Money Does) and calls to assimilate the dollarization process of substitution. In this context, the dollarization describes nothing else than the substitution by residents of inside money by outside money in its three functions: unit of account, medium of exchange (payment method), a store of value. This scheme favors dollarization substitution model that translates the will of agents to diversify and protect their assets against the risk of devaluation of the national currency. It should in this regard to distinguish between the two patterns of demand for foreign currency: the currency substitution and the substitution of financial assets. Models of currency substitution (currency substitution) refer to situations where there is demand for foreign currency to provide the functions of unit of account and payment method. The xénomonnaie (the dollar) is the main instrument of monetary circulation. This situation manifests itself in a situation of hyperinflation which makes the cost of using the national currency too high to complete transactions and encourage agents to find alternative monetary instruments [Balino, 1999, p.5]. This form of dollarization has been a notable development in the countries of Latin America and some Asian countries after the stabilization of inflation.
Substitution of financial assets (assets substitution) in turn is a trend that follows the assessment of risk and potential return on assets denominated in local currency and foreign currency. Assets denominated in foreign currency holders to protect their macroeconomic risks to the example of price instability and long periods of depression have shaken many developing countries. The model and the tradeoff between the asset portfolio of domestic and foreign assets.
analysis in terms of currency substitution and asset substitution allows to assess the degree of penetration of the dollar in a given country. Until recently, measures the degree of dollarization have focused mainly on the phenomena of substitution of assets, especially deposits in domestic banks. Today, the primary index used to measure the dollarization is that which gives an overview of the dollarization of deposits (Ratio of foreign currency Deposits / Broad money) [Ponsot, 2003]. According to the study of Socorro [2006] over the period 1996 to 2001 that with the exception of the Caribbean and developed countries, other regions attend a significant increase in the ratio on dollarization in terms of deposits. This increase was evident both in South America, in the economies in transition, the Middle East, Africa or Asia. A trend toward dollarization of the world is well in recent years if we refer to this indicator. As an illustration, in Latin America in countries like Argentina, Peru and Chile, deposits in dollars surplus the deposits in national currency (above 65%). One of the negative consequences of partial dollarization is the risk of liquidity and solvency. The non-assessment of these risks can be a source of massive withdrawals of bank deposits and financial crisis. As explained Socorro [2006], liquidity risk due to the non-coverage of dollar liabilities of banks. A supposed increase in country risk or credit risk could push other depositors or creditors to convert their deposits or lines of credit in dollars or in the liquid transfer abroad. The dollar liabilities must be paid at par against foreign currencies. This can lead to a depletion of total foreign exchange reserves of the central bank where the liquid assets in dollars abroad do not cover dollar liabilities. This is the case of Argentina and Peru where the dollarization of deposits is much lower than the dollarization of loans from the domestic banking system. The opposite trend is observed in Turkey and Uruguay. Some countries are therefore more exposed and vulnerable to devaluation. Fear of devaluation (Offloating fear) is increasing and gradually as the liability dollarization increases [Calvo, Reinhart]. A deteriorating economic situation may also cause bank runs as was the case of Mexico in 1982, the Argentina and Uruguay in 2001 and Bolivia in 2003. In
dollarized countries, liquidity risks resulting from an imbalance between assets and liabilities in foreign currencies, and the effects of a sharp depreciation of the currency. When the foreign currency liabilities of a bank its surplus assets in these currencies, a depreciation of the currency National will reduce its net worth and could endanger its solvency. That's what happens when a bank accepts foreign currency deposits and granting loans in local currency.
Focus analysis of dollarization in terms of asset substitution results in a prioritization function reserve value of money at the expense of the other two functions of money (means of payment, unit of account). The Recent studies have tried to overcome this restriction giving more priority to the currency substitution that is to say, the relative role of xénomonnaie over monetary circulation Local. A primary issue that needs to be clarified here is how and what indicator variable analysis used? An account of money in the strict sense of the term is tantamount to considering the monetary aggregate M1 as the analysis variable. The report's analysis of the foreign currency (xénomonnaie) in the strict sense throughout this monetary aggregate gives the degree of dollarization monetary strict sense of a country. The extension of this approach to the M3-M1 allows to know the degree of financial dollarization in a country. The analysis refers to the monetary aggregate M3 that is to say, the broad money highlights the broad money dollarization of the country concerned. In this analysis, the M3 will be considered as the variable best able to explain the dollarization money. From this fact, dollarization currency may be understand by observing the evolution and value of the indicator dm3.

dm3 = Notes and coins dollarized + dollarized total deposits / Broad money in foreign currencies and the direction of M3
Table 22: Monetary dollarization in Latin America within the meaning of M3
1993Q1-2001Q3
Argentina Bolivia Brazil 1996Q4 2005Q3 1992Q4-2005Q3-1995Q4-2005Q4 Chile Colombia 1995Q1 2005Q4-1993Q1-2005Q3 Costa Rica Mexico Peru 1993Q4 2005Q4 1992Q4-2005Q3-TOF
periodic 0.39 0.84 0.1 0.26 0 , 06 0.52 0.07 0.76
periods ended 0.6 0.77 0.1 0.2 0.06 0.61 0.07 0.63 0.39 0.77 0.09 Minimum
0 , 19 0.03 0.49 0.06 0.61
Max 0.6 0.88 0.14 0.27 0.06 0.62 0.23 0.77 0.48 0.85 Average
0 1 0.23 0.04 0.57 0.08 0.71
standard deviation 0.05 0.03 0.01 0.01 0.01 0.04 0.03 0.03

Source: Colliac Stéphane [2006 , p.133].
Three groups of countries can be formulated in terms of dollarization broad money in Latin America. The first group formed by low-dollarization composed of Brazil, Colombia and Mexico. In these three countries, the bulk of the foreign currency is held in the form of banknotes and parts. This is normal in Brazil since the foreign currency deposits are prohibited. Strong restrictions on holding foreign currency deposits also explains the result of Colombia. The second group consists of countries with dollarization means which is part of Argentina and Costa Rica. We also note that dollarization monetary sense of M3 is increasing in these two countries. The third group consists of countries with high dollarization currency. This is so in Bolivia and Peru. This phenomenon can be explained by the fact that both countries have a monetary competition at all levels. However, we note that dollarization currency following a downward trend in both countries. In Peru, this is explained by adopting a policy of gradual de-dollarization through incentives. This strategy has several pillars to anchor expectations of low inflation through direct targeting and promote indigenization of foreign exchange risk in the economic calculation [Colliac, 2006].
If dollarization helped stabilize some economies and led to dollarisation regime, it is not the point for others. Bosnia-Herzegovina, Israel, Mexico, Poland and Slovenia dollarisation their economies after applying a credible fight against inflation. In some of these countries, dollarisation was supported by regulations and even a forced conversion into domestic currency assets or liabilities in dollars. The persistence of dollarization after stabilizing the national currency brings good many economists to question the real effectiveness of this monetary regime. By cons, countries tempted by the forced de-dollarization have suffered considerable capital flight. In 1982 in Mexico, it has been estimated at 6, $ 5 billion. Bolivia and Peru in 1982 following suit in 1985 in Mexico. In the measurement. Alan Greenspan has repeatedly warned the candidates to full dollarization as the Federal Reserve (FED) will not take into account their specific circumstances in the conduct of monetary policy. This position confirms Greenspan recess the hegemonic position U.S. dollar internationally. Dollarization (intentional or suffers) from developing countries marks a kind of "monetary bid" vis-à-vis the United States. This is the most concrete manifestation of the financial dependence of developing countries vis-à-vis the outside, especially vis-à-vis the United States.

Dollarization is an apparent forms of the loss of monetary sovereignty of developing countries. The experience of countries in the CFA franc zone but is also explained by a different monetary regime of domination.
3-zone franc undermines monetary sovereignty of member countries

Countries in the franc zone are also affected by the problem of sovereignty over monetary agreement monetary cooperation with France. The Franc Zone is an extension of the cooperation agreement between France and its colonies occurred in 1939. It reflects the cooperation between fifteen African countries between them and France, consists of eight African countries from the West (Benin, Burkina Faso, Cote d'Ivoire, Guinea Bissau, Mali, Niger, Senegal and Togo), six Central African countries (Cameroon, Central African Republic, Congo, Gabon, Equatorial Guinea and Chad) and the Comoros. Claveranne As noted [2005, p .1]: "Simple monetary union at the origin, the franc zone has been deployed in many other areas. It calls first for its efficiency, that of having made the monetary stability a reality alive. She also impressed by his longevity, the result of its adaptability, since it is the only all monetary unions created in the 1930s to have survived. "Beyond the monetary cooperation between ETAS, the Franc zone reflects also a kind of "guardianship money" of France in respect of the member countries. For Some [Samir Amin Mamadou Diarra, Kerlfalla Yanase, Stanley Fisher, Celestin Monga [1996], etc.], it is an impediment to economic development in the area, through the interference of France and monetary loss of monetary sovereignty. For general others, monetary stability, the result of the franc zone reflects the need for the sustainability of this system. One thing is certain, the franc zone calls into question the monetary sovereignty of member countries. But abandoning the franc zone as recommended by some economists, he offers a bright future for the countries of the Franc Zone? That is the question worth asking and which will attract our attention here. Michel Lelart [2007] describes the franc zone as a Franco-African Monetary System (SMFA). For Michel Lelart [Ibid, p .105-107], the SMFA (Franc Zone) is governed by three principles: i) is a system of exchange, ii) is a system of regulation, iii) c ' is a system of credits. As the exchange rate system, the franc zone monetary stability ensures members of the two central banks in the area (BEAC and the BCEAO). The sustainability of the stability is ensured by the CFA zone France despite the devaluation of 50% in 1994. The Franc Zone is also a system regulations based on full convertibility of the CFA franc. This convertibility is guaranteed by the operating account held by the French treasury. By this mechanism of transaction account, surpluses and deficits in countries' external position of the area are provided by the French Treasury. As noted by Michel Lelart [Ibid, p.106]: "This is not convertibility limited to balances of interventions because central banks do not intervene in markets but the entire operation. " The Franc Zone is also a system of credits to the extent that the operations account is not open to each state but each central bank. Reflects the balance while the surplus / deficit positions of member countries. They then mutually funding. A net external position of the whole area is reflected by a credit transaction account that will drive the forex reserves of France and not those of the members (as is the France, which holds these reserves). Otherwise, if the account balance is negative transactions (debtor), it is France that must supply the currency necessary to finance the hole and the financing of the balance is unlimited. Overdraft permanent and unlimited is complemented by long-term loans granted by the French Development Fund agrees that over 60% of its loans to countries in the area [Ibid, p, 107]. Referring to the three principles outlined in the franc zone by Michel Lelart, the stability of the currency and convertibility of the franc zone must be considered the two main arguments that reinforce still maintaining the franc zone.
But the franc zone challenges as the monetary sovereignty of member countries, while monetary sovereignty is considered an essential attribute of a sovereign state. Sovereignty is defined as "the quality of the state of being obligated or committed by his own will within the overarching principle of law and in accordance with the collective goal that is called to achieve." Monetary sovereignty as we have defined above translates to: "the ability of the monetary authority to manage its monetary policy without having the influence of another entity monetary system in question." Even if their status The countries of the franc zone are free to choose the parity of their currency, in practice, France is not going not let them take action against him because it also benefits from the agreement for monetary cooperation through trade and financial relations maintained with the countries of the area. It would be completely unrealistic to think that countries in the franc zone could take monetary measures that are inconsistent with the national interest on which the CFA franc is pledged (France). Again and not least, stability is certainly a good thing for these countries but the duration and continuity of monetary agreement with France can be terminated at some point. So far, this has always been avoided but the future does not necessarily reflect the sustainability of this model of monetary cooperation. If one day for various reasons: political, economic, or financial and France decided to terminate the agreement on the franc zone member countries are in a delicate situation. Still, political responsibility, economic and financial circumstances of these countries should be highlighted. One wonders why so countries that have had their independence for nearly fifty years still can not secure their own destiny and entrusting a large part of their monetary management to the former colonial power? This translates into recess not a kind of irresponsibility of African countries. Finally, most economic studies that attempt to assess the difference between the member countries of the franc zone and those non-members do not really rise to fundamental differences between these countries. In terms of economic growth, development, or institutional framework, so far, the countries of the franc zone, despite the stability of their currencies are not detached from other African countries like (apart from Africa and South Mauritius who are already ahead of the pack). This situation is rooted in the fact that the countries of the franc zone have no leeway adjustment of economic policy
(monetary policy) in case of need. Regulatory frameworks that govern the European Monetary Union (UEMOA) and the Economic and Monetary Community of Central Africa (CEMAC) does not allow monetary authorities to give more credit to governments, even if needed (limited to 20% of revenues last year). Models of UEMOA and CEMAC are largely inspired by the Maastricht Treaty of 1992. In this sense Lelart Michel [1994] argues that "it is the Experience European Community which was the basis for the establishment of these two treaties (UEMOA and CEMAC). As part of the franc zone member countries no longer have the prerogative of flexibility of monetary policy or budget because they are forced to respect the convergence criteria that determine the longevity of their union. For all these reasons mentioned, one can ask whether countries in the franc zone are sovereign countries monetarily because they lack the power to coin money, a political act that destroys the foundations of this sovereignty. In addition, these countries share a currency, imposed since the colonial period. One thing is sure, this guardianship monitors the monetary area economies and ensures the benefits of French capital by providing unlimited convertibility, fixed exchange rate with the euro (with the French franc until 1999) and especially the freedom of transfer . In a global economic system guided by the pursuit of profit and strategic interests, it is not the fault of France to continue the franc zone even leave to intervene in monetary management in these countries through its directors at each bank Central Zone (BEAC and BCEAO). Countries of the area but to free the system " Monetary easement "if they really want to control their own development on their own.

That such is the effectiveness of monetary sovereignty of developing countries in a world increasingly finance-where the potential crisis is becoming larger. At each decision maker, researcher and citizen, while taking into account this reality there for a harmonious world and future of developing countries.