Adopting the US Dollar

[VPH]

What all countries have just decided to take up the USD as their currency? I know Zimbabwe has after experiencing hyper inflation. Theoretically, couldn't Greece just leave the Eurozone and take up the USD? Or are they too large of an economy to pull that off?

[they don't love you like i love you]

That would require said to country to be OK giving control of their money supply to the Federal Reserve. Some have (like Ecuador) but letting a foreign country run your currency isn't appealing to most.

[Clarko95 📚💰📈]

I don't know what benefit that would bring Greece.


Their debts are denominated in Euros, which are currently worth more than USD, so to pay their debts, they would have to collect dollars and convert them to Euros; if the Euro appreciates, their debts become harder to pay off.

To illustrate, the exchange rate from 1 Euro to dollars is 1 Euro = $1.14 (which is why taking a vacation to Europe would be a great idea right now), down from a blistering 1 Euro = $1.47 in 2011, and $1.58 in early 2008.  

They would also be subject to our interest rates set by the Federal Reserve. This would suck for them because if we decide to raise interest rates as our domestic economy improves, the value of the dollar would rise relative to the Euro (and all other currencies for that matter), which would make our exports less competitive, and also Greece's. If anything, Greece needs a currency that is devalued to stimulate their economy, that simultaneously doesn't make their real debts larger (here lies the Catch-22 of a potential Grexit).

The European Central Bank has lowered interest rates and begun QE to stimulate the financial sector (in 2011, in a profoundely retarded decision, they chose to raise interest rates right as the broader Eurozone economy was teetering on the edge), and withdrawing from that has zero benefits.

There really is no benefit to Greece adopting the US Dollar, as far as I can tell.

[🦀🎂🦀🎂]

This would be a solution if the Greek crisis was related to, like, inflation or something; but it's more structural than that.

[ag]

What all countries have just decided to take up the USD as their currency? I know Zimbabwe has after experiencing hyper inflation. Theoretically, couldn't Greece just leave the Eurozone and take up the USD? Or are they too large of an economy to pull that off?

They could, of course. But it would do nothing to address their problems. In fact, given how strong the dollar has been recently, had they done so a year ago, they would have been strictly worse off that way than staying with the euro.  They need to devalue. Adopting the dollar is not addressing this at all.

Adopting the dollar (or the euro for that matter, if you are not a part of the euro zone) is a good solution when a country is not trusted (and does not trust itself) to keep inflation under control. Once it goes through with the devaluation, Greece may get there, but, for the moment, that is not the problem at all.

[Taco Truck 🚚]

Theoretically, couldn't Greece just leave the Eurozone and take up the USD? Or are they too large of an economy to pull that off?

Isn't giving up their currency and joining a union with a higher economic growth rate than them what got them in trouble?  The US is talking about raising rates.  Greece needs to cut rates.  So again their needs would be at odds with their new central bank.  And the situation is even worse because the US is even further away and has even more restriction regarding the flow of labor, goods, services, etc.  If people from Greece could pick up and go get jobs in Germany they wouldn't have a problem.  But language barriers, culture and who knows what else prevent the EU from functioning like a kinder gentler US.

[Јas]

What all countries have just decided to take up the USD as their currency? I know Zimbabwe has after experiencing hyper inflation. Theoretically, couldn't Greece just leave the Eurozone and take up the USD? Or are they too large of an economy to pull that off?

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https://en.wikipedia.org/wiki/Currency_substitution#US_dollar


Below is a map on currency substitution and pegging.
Light green shaded territories peg to the dollar.

[ag]

I am back from Costa Rica yesterday. The local currency is colon, and there is no fixed peg. They are accepting dollars pretty widely, but getting dollar change is another matter. Except in tourist places and hotels prices are quoted in colons. To sum up, though dollars are usually accepted, locals mostly use colons.