Working Paper Series: Special Edition of 2016 to 2018 Interns

APPENDIX Table 1. Exchange Rate Regime that prevails in the Countries of Latin America and the Caribbean 45 Exchange Rate Arrangement Country 46 Definition Of The Arrangement Exchange Rate Regime

Ecuador El Salvador Panama

The currency of another country (USA in this case) circulates as the sole legal tender (formal dollarization). Adopting such an arrangement implies complete surrender of the monetary authorities’ control over domestic monetary policy. A monetary arrangement based on an explicit legislative commitment to exchange domestic currency for a specified foreign currency at a fixed exchange rate. The domestic currency is usually fully backed by foreign assets, eliminating traditional central bank functions such as monetary control and lender of last resort, and leaving little room for discretionary monetary policy. The country formally pegs its currency at a fixed rate to a basket of currencies, where the basket is formed from the currencies of major trading or financial partners and weights reflect the geographic distribution of trade, services, or capital flows. Entails a spot market exchange rate that remains within a margin of 2% for six months or

No Separate Legal Tender

Fixed

Antigua and Barbuda Dominica Grenada St Kitts St Lucia St Vincent and the Grenadines

Quasi- Currency Boar

Fixed

Bahamas Barbados Belize Bolivia (Cuba) 47 Venezuela

Conventional Peg

Fixed

Guyana Suriname Trinidad and Tobago

Stabilized Arrangement

Fixed

45 All definitions stated and classifications identified were taken from the IMF Annual Report on Exchange Rate Arrangements (2014). 46 No asterisk signifies that those country’s regime are USD anchor specific, one asterisk (*) means they are using a monetary policy framework and two asterisks (**) mean that those countries are operating under an inflationary policy framework. 47 Cuba was excluded from research paper due to the lack of requisite data for that country.

142