Read the lesson in English  
then translate to your own language to verify your understanding.

Dollarization | English Lesson

Jul 6, 2022

The topic of this English lesson for economists is dollarization.  

Inflation rates have increased all over the world, but while some countries are dealing with inflation rates of 5 or 6 percent per year, other countries are struggling with rates of 5 or 6 percent per month, or even more. Managing those high levels is a big challenge for policymakers. One of the possible solutions that gets considered is to replace the domestic currency with the euro or more frequently, the US dollar. Dollarization.

So, here are some words you can use to engage in the conversation:

Vocabulary

  • Legal Tender: Banknotes and coins recognized by law as a means to pay a debt or meet a financial obligation. So, for example, the Uruguayan Peso is the legal tender of Uruguay. The Chilean Peso is the legal tender of Chile. Legal tender.
  • Currency Peg: a policy in which a national government sets a specific fixed exchange rate for its currency with a foreign currency or a basket of currencies. Currency peg.
    • By the way, in general terms, a peg is used to fasten things together. A clothes peg, for example, is what you might use to hang your clothing online to dry. A peg. And in this case, a currency peg.
  • Hard dollarization: This is official dollarization.
  • Soft dollarization: That is partial, unofficial dollarization. Sometimes it is referred to as a de facto dollarization, where the dollar exists as an alternative to a domestic currency.

Let’s deepen the lesson a little bit and look at a headline of an opinion piece that was published at the end of April 2022 in America’s Quarterly. See if you understand the English:

Let’s break this headline down to see what it means, and see which vocabulary might be useful for you to learn.

The first expression is ‘silver bullet’. A silver bullet is a simple, almost magical solution to a complicated problem. In Spanish, you know this expression as ‘una bala de plata’.  Bala de Plata: Silver bullet. Same thing.

And ‘woes’? A woe is something that causes you trouble — a problem. Woe is a word that you will find written more than spoken. It is not very commonly used. Still, you should understand it when you see it.

Okay. That’s all the words. Here is a quick review of all the key vocabulary

Vocabulary Review

  • Legal Tender: Banknotes and coins recognized by law as a means to pay a debt or meet a financial obligation. So, for example, the Uruguayan Peso is the legal tender of Uruguay. The Chilean Peso is the legal tender of Chile. Legal tender.
  • Currency Peg: a policy in which a national government sets a specific fixed exchange rate for its currency with a foreign currency or a basket of currencies. Currency peg.
    • By the way, in general terms, a peg is used to fasten things together. A clothes peg, for example, is what you might use to hang your clothing online to dry. A peg. And in this case, a currency peg.
  • Hard dollarization: This is official dollarization.
  • Soft dollarization: That is partial, unofficial dollarization. Sometimes it is referred to as a de facto dollarization, where the dollar exists as an alternative to a domestic currency.
  • Silver bullet: a simple, almost magical solution to a complicated problem
  • Woe: something that causes you trouble — a problem

Conclusion

That covers the new vocabulary. Please, if this topic interests you, you could also watch lessons on Sovereign Debt and Default and CBDC, Stablecoins, DeFi and Web3.  

Okay. That’s it for now. I will be back next week with another English lesson for economists. See you then.  

Image used courtesy of Manuel Dohmen – Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=185802

 

Join Our Podcast Club

You Can Also Subscribe to Our Podcast On These Platforms:

Follow us on spotify
Apple Podcast

0 Comments

Submit a Comment

Your email address will not be published. Required fields are marked *

Latest Podcasts

The Meaning of ‘Upflation’

The Meaning of ‘Upflation’

Improve your pronunciation and expand your vocabulary with the new “Economists in Action” video course. Four hours of instruction for anyone who wants to improve their ability to speak about the economy in English. Find it now on Udemy, or at Englishforeconomists.com....

‘Raking in’ the Profits

‘Raking in’ the Profits

Today we are going to unpack not one, but two useful expressions, and by ‘unpack’, I mean that we will break them down in order to understand their meaning. Listen closely. This first headline comes from CNN News. It reads: "Why oil companies are ‘raking in’ record...

The 996 Culture

The 996 Culture

What is the 996 culture? This refers to a work schedule that has been making waves in the tech industry, particularly in China. Yes, the "996" culture. It’s a practice that's been both supported and criticized for its impact on employees and companies alike. But...

Shrinkflation, Skimpflation and the ‘Sheconomy’

Shrinkflation, Skimpflation and the ‘Sheconomy’

Hello, friends. It’s great to be back. Having been away for quite some time, I've prepared a special episode for you. Today, we're not just covering one but two headlines. As we look at these stories, I'll introduce you to some fascinating terms that describe very...

‘White Swan’ and ‘Black Swan’ Events

‘White Swan’ and ‘Black Swan’ Events

Today, we're exploring a fascinating topic that has attracted a lot of attention in financial circles: the concept of Black Swan and White Swan events. Our discussion and English class today was inspired by a recent Bloomberg article from January 30th titled, "A...