Dollarization in Vietnam: Current Situation and Solutions

The process of globalization of the world economy has linked the economies of countries together. This connection leads to currency penetration between countries, the currency of one country is circulated in another country and vice versa. Furthermore, globalization promotes the unification of the world economy. This unification inevitably requires the formation of a world currency to strengthen the connection between individual economies. When a world currency does not have enough conditions to be established, during the transition period, a national currency accounting for a large economic proportion in the world economy and with high convertibility can play the role world currency replacement game. The USD is the number one currency in performing this role. In recent years, although inflation has been controlled and tends to stabilize at a low level, dollarization is still a common phenomenon in Vietnam. In an economic environment where dollarization persists, the management of macroeconomic policy in general and monetary policy in particular faces many difficulties. This article analyzes the current situation of dollarization in Vietnam, its impact on policy administration, and then proposes some appropriate solutions.