PORT-OF-SPAIN, (AP):
DROPPING THE Trinidadian dollar and adopting the American one could be good for the Caribbean country of Trinidad and Tobago, a US economist says.
"Currency consolidation is inevitable," Robert Stein, staff director for the US Senate's Banking Subcommittee on Economic Policy, told listeners at the Hilton Trinidad Friday.
He cited Ecuador's recent adoption of the American greenback, which Ecuadorean officials hope will help strengthen their economy.
Stein, who has published two books on the subject, spoke at the Trinidad's annual Chamber of Commerce dinner. He told the audience of about 300 people that he was speaking on his own behalf, not that of the US government.
He said dumping a national currency is "an emotional issue, like getting rid of the national flag."
But he said it can soften what he called "currency crisis contagion," like the crisis that swept Asia in 1997; and said it would lower high interest rates in Trinidad.
He also said dollarisation would increase trade, since studies show that countries trade three times more if they share a currency. It would also prevent governments from trying to get out of fiscal problems by printing more money, he predicted.
Stein said the dollarisation of foreign countries would mainly benefit the United States by encouraging investment among its ageing population.
"Baby boomers need to send their excess capital abroad, where it can attach to labour that will return it back to the States in the form of products and earnings," Stein said.
The Caribbean already has three territories that use the US dollar as their currency -- the British Virgin Islands, Puerto Rico and the US Virgin Islands. The dollar of the Bahamas is also pegged to the US dollar.
Other places using the US dollar include Panama, Guam, the Marshall Islands, Micronesia, Palau and American Saa.
