Zimbabwe’s hyperinflation: Can dollarization be the cure?

Abstract

This chapter results from a study of the main features of four possible monetary system options that can be potential solutions to Zimbabwe’s current hyperinflationary trend. The system presented and analyzed here is dollarization, which occurs when a country makes a foreign currency (currencies) full legal tender and reduces its own currency, if any, to a subsidiary role-issued only in coins having small value. For this system, the practicality of Zimbabwe adopting and/or implementing dollarization is also explained. The conclusion of the research is that, generally, the country is ready to adopt official dollarization; however, several issues specific to Zimbabwe need to be seriously considered, otherwise implementation of any of these systems may be both fruitless and a waste of resources.