Dollarization: The end of monetary pluralism in Latin America?

Globalisation is bringing the countries of North and South America closer together and in some cases eliminating monetary pluralism. One trend, which has gone virtually unnoticed, is full dollarization in small countries of Latin America, such as Ecuador and El Salvador, with Guatemala a possible third candidate. Distinct from Argentina, these countries decided to go a step further than fixed exchange rates and currency boards - they have abandoned monetary policy altogether in favour of using U.S. dollars for all transactions. Former Argentine president Carlos Menem argued for this type of full dollarization for Argentina as well. In many other countries the dollar is accepted as legal tender parallel with the national currency and in all countries the dollar is a common substitute for business transactions and investments. This trend will have a significant impact not only on the types of monetary policy in the region but also on the quantity of independent currencies. Monetary pluralism is slowly disappearing. How far will it go and what are its effects for the region and the rest of the world?