[Congressional Record (Bound Edition), Volume 145 (1999), Part 21]
[Extensions of Remarks]
[Page 31248]
[From the U.S. Government Publishing Office, www.gpo.gov]



    INTRODUCTION OF THE INTERNATIONAL MONETARY STABILITY ACT OF 2000

                                 ______
                                 

                             HON. PAUL RYAN

                              of wisconsin

                    in the house of representatives

                      Thursday, November 18, 1999

  Mr. RYAN of Wisconsin. Mr. Speaker, today I am introducing the 
International Monetary Stability Act of 2000. This bill would give 
countries who have been seriously considering using the U.S. dollar as 
ther national currency the incentive to do so. When a foreign country 
grants the U.S. dollar legal tender in replace of its own currency, 
that country dollarizes. This bill would serve to encourage such 
dollarization.
  Up to this point, the United States has been missing one of the best 
opportunities to correct chaotic currency markets, especially in the 
Western Hemisphere. Sound currency policies, such as dollarization, 
that focus on exchange rate stabilization would put an end to the 
debilitating and periodic collapse of developing countries caused by 
haphazard devaluation.
  Congressional leadership in exchange rate policies would protect our 
own economy. Every devaluation affects our economy through 
international trade and through the equity markets. American companies 
need reliable currencies to make investment decisions abroad; and 
American workers need to know countries cannot competitively devalue in 
an effort to lower foreign worker wages. The ramifications of an Asian-
style economic collapse in Latin America, our own back yard, call for 
legislation that will help these countries embrace consistent economic 
growth.
  Today, several countries are already considering dollarization. They 
realize that by either linking with the U.S. dollar, legalizing 
competing foreign currencies, or scrapping their currency altogether 
and replacing it with the dollar, they will encourage long-term 
economic stability through lower interest rates, stable exchange rates 
and increased investment.
  Official dollarization, such as is encouraged by this bill, is not a 
new idea. In fact, it is becoming an increasingly popular answer to 
currency stabilization in emerging markets. Argentina is seriously 
considering such a currency reform. Mexico, Ecuador, and El Salvador 
have also considered dollarization.
  Enacting this legislation would set up a structure in which the U.S. 
Treasury would have the discretion to promote official dollarization in 
emerging market countries by offering to rebate 85 percent of the 
resulting increase in U.S. seigniorage earnings. Part of the remaining 
15 percent would be distributed to countries like Panama that have 
already dollarized, but the majority of the 15 percent would be 
deposited at the Treasury Department as government revenue. 
Additionally, this bill would make it clear that the United States has 
no obligation to serve as a lender of last resort to dollarized 
countries, consider their economic conditions in setting monetary 
policy or supervise their banks.
  I strongly believe that strengthening global economies, especially 
those in the Western Hemisphere, by encouraging dollarization is in 
America's best interest.

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