The Center for Economic Investigation of the Antilles (Cenantillas), the department of economic research of the Pontificia Universidad Catolica Madre y Maestra, is proposing opening discussions for the economy to adopt the United States dollar as official currency. El Caribe newspaper reports that Pedro Silverio, director of the center, advocates that the country has much more to gain than to lose. In Latin America, the US dollar is already the currency in Panama, Ecuador and El Salvador. Speaking out for the dollar, Silverio said that interest rates would dramatically decrease as a result of an increase in competition in the financial system, and a forcing of reduction in bank profit margins. This would stimulate investment. The elimination of the exchange risk would also facilitate long term planning in the economy. He said the country would lose the right to implement its own monetary policy, but on the plus side the Central Bank would no longer be able to print money to resolve fiscal deficits. The government would have to instate greater fiscal discipline aware that overspending in the public sector will have to be financed by increased taxes or private indebtedness, he explained. He says that switching to US dollars will bring greater macroeconomic stability in regards to inflation, devaluation, fiscal deficits and monetary restrictions. He says the DR economy would increase its dependence on the US, but explains that the effect of this would hardly be felt as at present 70% of the country’s trade is already with the US.
