The thrust of current deposit insurance reform--risk-based insurance premiums and capital requirements--is an effort to price deposit insurance more fairly. Fairly pricing deposit insurance eliminates inequitable wealth transfers, but it does not lead to an efficient equilibrium. This paper...

When a country abandons a fixed, or target zone exchange regime it usually claims that the regime was "fundamentally" sound but that it was undermined by pernicious speculation. The validity of the claim is impossible to assess using only observable data-there always exists a future path of...

If dollarization is a credible commitment to maintain a fixed exchange rate, then it is an irreversible decision. This paper explicitly models the unique feature -- irreversibility -- of a dollarization policy. In addition, it is the first paper to recognize that if a dollarization is a...