Dollarising Indonesia

Abstract

The rupiah's record of instability, both recently and over the long term, suggests it is worthwhile to investigate options for radical monetary reform. An option currently receiving attention elsewhere is official dollarisation, under which a country ceases to issue a domestic currency and makes a foreign currency its official currency. This paper discusses the costs and benefits of dollarisation in Indonesia, the steps involved in dollarisation, and some economic and political implications of dollarisation.

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Notes on contributors

Kurt Schuler

Senior economist, Joint Economic Committee, US Congress;. The views I express here are my own alone. An earlier version was published in Indonesian as Schuler (1998).