[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2617 Introduced in House (IH)]
107th CONGRESS
1st Session
H. R. 2617
To promote international monetary stability and to share seigniorage
with officially dollarized countries.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 24, 2001
Mr. Ryan introduced the following bill; which was referred to the
Committee on Financial Services
_______________________________________________________________________
A BILL
To promote international monetary stability and to share seigniorage
with officially dollarized countries.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``International Monetary Stability Act
of 2001''.
SEC. 2. FINDINGS; STATEMENT OF POLICY.
(a) Findings.--Congress finds that--
(1) monetary stability is necessary for strong long-term
economic growth and higher standards of living;
(2) many emerging market countries lack monetary stability
and have therefore suffered economic and financial problems
that reduce their economic growth and living standards,
including currency crises, financial fragility, inflation
expectations that are built into labor markets, and high and
volatile inflation rates and interest rates;
(3) there has been growing international interest in
official dollarization, whereby a country substantially or
totally eliminates its domestic currency and adopts the United
States dollar as legal tender;
(4) official dollarization enables a country to import
monetary stability, thereby bringing inflation and interest
rates down toward the levels of the United States;
(5) greater monetary stability helps increase long-term
economic growth and raise living standards in emerging market
countries;
(6) by increasing trade and investment flows and decreasing
the need for foreign assistance, greater economic growth and
higher living standards abroad would serve the interests of the
United States;
(7) countries that become officially dollarized lose
seigniorage (the profit from issuing a currency), and this is a
significant barrier to official dollarization;
(8) official dollarization would increase the seigniorage
earnings of the United States;
(9) it would be mutually beneficial for the United States
to encourage official dollarization by offering to share with
countries that become officially dollarized a portion of the
extra seigniorage earnings that the United States would earn;
and
(10) encouraging official dollarization complements ongoing
efforts by the United States to strengthen the international
financial architecture.
(b) Statement of Policy.--It is the policy of the United States
that--
(1) the Federal Reserve System has no obligation to act as
a lender of last resort to the financial systems of dollarized
countries;
(2) the Federal Reserve System has no obligation to
consider the economic conditions of dollarized countries when
formulating or implementing monetary policy;
(3) the supervision of financial institutions in dollarized
countries remains the responsibility of those countries; and
(4) in the absence of qualification by the Secretary of the
Treasury under section 3, countries are free to dollarize
unilaterally.
SEC. 3. QUALIFICATION.
(a) In General.--The Secretary of the Treasury (in this Act
referred to as the ``Secretary'') may qualify a country as officially
dollarized for purposes of this Act, after consideration of whether the
country has--
(1) ceased issuing a local paper currency;
(2) extinguished a substantial portion of the domestic
currency in circulation, with plans to extinguish as much of
that currency as feasible;
(3) granted legal tender status to the United States
dollar; and
(4) substantially redenominated its prices, assets, and
liabilities in United States dollars;
(b) Other Considerations.--In deciding whether to qualify a country
as officially dollarized under this section, the Secretary may consider
any additional factors the Secretary deems relevant.
(c) Statement by Secretary.--The Secretary shall issue a written
statement on qualification of a country under this section that
explains why the country has been qualified.
(d) Limitation.--The Secretary may not qualify a United States
territory or commonwealth as officially dollarized for purposes of this
Act.
SEC. 4. PAYMENTS.
(a) In General.--Beginning with the 1st business day of the 4th
full calendar month after the date a country is qualified under section
3, the Secretary shall, every 3 months, pay the government of the
country an amount equal to 21.25 percent of D, multiplied by I,
multiplied by P2, divided by P1.
(b) Definitions.--In subsection (a):
(1) D.--The term ``D'' means the lesser of--
(A) the dollar amount of Federal reserve notes the
country acquired from the Federal Reserve System for
purposes of official dollarization under this Act; or
(B) the dollar value of the domestic currency of
the country in circulation in the country before the
country was qualified.
(2) I.--The term ``I'' means the average yield to maturity
on 90-day Treasury bills in the most recent 3 calendar month
period occurring before the date of payment under subsection
(a), except that if a 90-day Treasury bill is not issued during
the 3-month period, the Secretary may substitute an appropriate
alternative interest rate.
(3) P1.--The term ```P1'' means the nonseasonally adjusted
United States City Average All Items Consumer Price Index for
All Urban Consumers for the month falling three months before
the most recent month occurring before the date of payment
under subsection (a) for which data are available, except that
if the price measure is discontinued or, in the judgment of the
Secretary, altered in a manner that is materially adverse to
the interests of the United States, the Secretary may, after
consultation with the Bureau of Labor Statistics, substitute an
appropriate alternative index.
(4) P2.--The term ``P2'' means the nonseasonally adjusted
United States City Average All Items Consumer Price Index for
All Urban Consumers for the most recent month occurring before
the date of payment under subsection (a) for which data are
available, except that if the price measure is discontinued or,
in the judgment of the Secretary, altered in a manner that is
materially adverse to the interests of the United States, the
Secretary may, after consultation with the Bureau of Labor
Statistics, substitute an appropriate alternative index.
SEC. 5. PREVIOUSLY DOLLARIZED COUNTRIES.
(a) Limitation.--The Secretary of the Treasury may not make a
payment under section 3 to the British Virgin Islands, East Timor, the
Republic of El Salvador, the Republic of the Marshall Islands, the
Federated States of Micronesia, the Republic of Palau, the Republic of
Panama, or the Turks and Caicos Islands until 10 percent of the
payments made countries not specified in this subsection equals or
exceeds the total of the payments that would be made in accordance with
subsection (b) of this section to the countries specified in this
subsection on qualification of the countries.
(b) Payment Calculation.--On qualification under section 3 of a
country specified in subsection (a) of this section, the Secretary of
the Treasury shall make payments to the country pursuant to section 4,
except that in applying section 4, the term ``D'' means an amount equal
to 4 percent of the nominal dollar gross domestic product for the
country, as calculated by the International Bank for Reconstruction and
Development (or other recognized statistical authority), as of June 1,
2001, for calendar year 1999.
SEC. 6. DISQUALIFICATION AND PAYMENT CANCELLATION.
(a) Limitation.--The Secretary shall disqualify, and cease making
payments to, a country under this Act if--
(1) the United States declares war on the country; or
(2) the Secretary determines that the country is no longer
officially dollarized in accordance with this Act, and issues a
written public statement to that effect that lists the reasons
for the determination.
(b) Considerations.--In making a determination under this section,
the Secretary shall consider the factors listed in section 3(a) and any
additional factors that the Secretary deems relevant.
SEC. 7. REGULATIONS.
The Secretary may issue such regulations as are appropriate to
carry out this Act.
SEC. 8. EXPENSES.
The amounts in the stabilization fund established by section 5302
of title 31, United States Code, (or, if the amounts in the
stabilization fund are not sufficient, the amounts deposited in the
surplus funds of the Federal Reserve Banks in accordance with section
7(a)(2) of the Federal Reserve Act) shall be available to cover the
expenses and payments under this Act.
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