What is dollarization

According to Zhang Yuyan (1999) of the Chinese Academy of Social Sciences, dollarization includes three meanings: factual dollarization, process dollarization and policy dollarization.

De facto dollarization means that as a matter of fact, the dollar has played an important role around the world;

Process dollarization means that as a process, the dollar will play an increasingly important role in both depth and breadth of financial activities outside the United States.

Policy dollarization is an action by the government of a country or economy to replace its currency with the dollar as a policy and eventually surrender monetary or financial sovereignty automatically.