What About the Currency Union?
The way I see it is this; a) Any country can use another countries currency, ie Turkey uses The Pound Sterling, most of the world uses the US dollar
b)A country can name is currency as whatever it wants however an Egyptian, Syrian or Lebanese pound is not a pound sterling. And the Aussie dollar is not a US dollar.
c)Currency union is possible providing that both parties agree to the terms and conditions. The Euro being an obvious example.
d)The argument that there is already a currency union between Scotland, England and Wales belies the fact that in reality , with the exception of sport, they have been considered for a couple of centuries or so as regions of the same country "The United Kingdom"
My question is, why would a country which has fought so hard to become independent want their Fiscal arrangements controlled by the country from which they have just seperated?
Advantages of Dollarization
Many advantages occur when a country adopts a foreign currency. The new currency helps stabilize the economy, which sometimes eases political crises. This credibility and predictability promotes foreign investment. The new currency helps lower inflation and interest rates and eliminates conversion fees and the risk of devaluation.
Disadvantages of Dollarization
If a country adopts a foreign currency, the national central bank no longer exists. The country can no longer control its own monetary policy or aid the economy in case of emergency. It can no longer collect seigniorage, which is a profit gained because the cost to produce money is usually less than its value. Under dollarization, seigniorage is earned by the foreign country. Many believe that dollarization symbolizes foreign control and causes dependency. National currencies are a source of great pride for citizens, and some are very reluctant to give up the symbol of their country's sovereignty. Dollarization does not solve all economic or political problems, and countries can still default on debt or maintain low living standards.