Most of their shocks seem likely to parallel those in the United States, with the exception of natural disasters, to which devaluation seems a poor policy response in any event. The only other disadvantage of dollarization is that they would lack a lender of last resort, but one suspects that use of the central bank to bail out banks in countries as small as these would be a disaster anyway. This implies that dollarization would be virtually all gain and almost no loss, at least in economic terms. Mexico's position is fairly similar to that of Canada. It is somewhat smaller and slightly less open, but more important are the facts that it has an interest premium, more liability dollarization, and less developed capital markets.
Brazil is clearly a much less compelling candidate than Canada for dollarization.
Its economy is larger, much less open, and has a far more diversified trade pattern. It is large enough to develop its own financial markets now that it has stabilized inflation. It has made use of the lender of last resort facility in recent years. It does not have much of a problem of liability dollarization. It increasingly expects to have a place at the table.