(11) countries that become officially dollarized
would lose seigniorage (the profit from issuing a cur-
rency) and this is a significant barrier to official
dollarization;
(12) official dollarization would increase the sei-
gniorage earnings of the United States;
(13) it would be mutually beneficial for the
United States to encourage official dollarization by
offering to share with countries that become offi-
cially dollarized a portion of the extra seigniorage
earnings that the United States would earn; and
(14) encouraging official dollarization com-
plements ongoing efforts by the United States to
strengthen the international financial architecture.
(b) STATEMENT OF POLICY.—It is the policy of the
United States that—
(1) the Federal Reserve System has no obliga-
tion to act as a lender of last resort to the financial
systems of dollarized countries;
(2) the Federal Reserve System has no obliga-
tion to consider the economic conditions of dollarized
countries when formulating or implementing mone-
tary policy; and
(3) the supervision of financial institutions in
dollarized countries remains the responsibility of
those countries.
SEC. 3. CERTIFICATION.
(a) IN GENERAL.—The Secretary of the Treasury (in
this Act referred to as the ‘‘Secretary’’) may certify a
country as officially dollarized, after consideration of
whether the country has—
(1) ceased issuing a local paper currency;
(2) destroyed the materials (such as plates and
dies) used to produce such currency;
(3) extinguished a substantial portion of the
local currency in circulation, with plans to extinguish
as much of it as feasible;
(4) ended the legal tender status of the local
currency;
(5) granted legal tender status to the United
States dollar;
(6) ceased accepting local currency, except in
exchange for dollars;
(7) ceased making government payments in the
local currency;
(8) substantially redenominated its prices, as-
sets, and liabilities in dollars;
(9) either opened its banking system to foreign
competition or met international banking standards
(such as those described in the Core Principles for
Effective Banking Supervision issued by the Basle
Committee on Banking Supervision of the Bank for
International Settlements); and
(10) engaged in advance consultations with the
Secretary to determine whether the country is a
good candidate for official dollarization.
(b) STATEMENT
BY SECRETARY.—The Secretary
shall issue a written statement upon certification of a
country under this section that explains why that country
has been certified. The Secretary may not certify United
States 
territories 
or 
commonwealths 
as 
officially
dollarized.
SEC. 4. CONSOL.
(a) ISSUANCE.—
(1) FACE
VALUE.—Upon certification of a
country under section 3, the Secretary shall issue to
the dollarized country a consol. Except as provided
in section 5, the face value of the consol shall be
equal to the amount of dollars exchanged for United
States Treasury securities by the Federal Reserve
System with the dollarized country for purposes of
official dollarization under this Act.
(2) LIMITATION.—Face value may not exceed
the dollar value of the local currency in circulation
in the dollarizing country prior to the certification of
that country as officially dollarized under section 3.
(b) INTEREST PAYMENTS.—
(1) IN GENERAL.—Starting with the first busi-
ness day of the fourth full calendar month following
the date of certification of a country under section
3, the owner of the consol will receive interest pay-
ments 
every 
calendar 
months 
equal 
to
(FV0)(i)(.25)[(C2-FV2)/(C1-FV1)](85%).
(2) DEFINITIONS.—In this Act—
(A) FV0 = face value of the consol issued
under this Act to the country receiving the pay-
ment;
(B) FV1 = face value of all consols issued
under this Act by the end of the most recent
full calendar year prior to the date of certifi-
cation under section 3 of the country receiving
the payment;
(C) FV2 = face value of all consols issued
under this Act by the end of the most recent
full calendar year prior to the payment;
(D) i = average yield to maturity on 90-
day Treasury bills in the most recent full 3-
month calendar period prior to the date of pay-
ment (using the average of monthly interest
rates, as calculated by the Board of Governors
of the Federal Reserve System);
(E) C2 = total global dollar currency in
circulation at the end of the most recent full
calendar year prior to the payment (as provided
by the Board of Governors of the Federal Re-
serve System); and
(F) C1 = total global dollar currency in
circulation at the end of the most recent full
calendar year prior to the date of certification
of the country receiving the payment (as pro-
vided by the Board of Governors of the Federal
Reserve System).
SEC. 5. PREVIOUSLY DOLLARIZED COUNTRIES.
(a) IN GENERAL.—
(1) LIMITATION.—The Republic of the Marshall
Islands, the Federated States of Micronesia, the Re-
public of Palau, Panama, the Turks and Caicos Is-
lands and the British Virgin Islands may not be cer-
tified as officially dollarized or issued consols until
10 percent of the face value of consols issued to
countries other than those listed in this paragraph
equals or exceeds the total combined face value of
consols that would be issued to the countries listed
in this paragraph upon their being certified.
(2) CONSOL CALCULATION.—
(A) 
IN
GENERAL.—Upon 
certification
under section 3, each of the countries listed in
paragraph (1) shall receive a consol with a face
value equal to (4%)(Y).
(B) DEFINITION.—For purpose of sub-
paragraph (A), Y = nominal dollar gross do-
mestic product, as calculated by the World
Bank (or other recognized statistical authority),
as of September 30, 1999, for calendar year
1997.
(3) PAYMENTS.—Interest payments on consols
to countries listed in paragraph (1) shall be made in
accordance with section 4.
SEC. 6. RIGHTS AND OBLIGATIONS.
Owners of consols issued under this Act shall have
the same rights and obligations as other owners of pri-
vately held obligations of the United States Treasury, ex-
cept that a consol originally issued to a country is ren-
dered null and void upon a United States declaration of
war on the country or a publicly issued statement by the
Secretary that the country is no longer officially dollarized
in accordance with this Act, but only if such written state-
ment lists the reasons for such a finding. In making a
determination under this section, the Secretary shall con-
sider those factors listed in section 3(a).
SEC. 7. REPURCHASE.
The Secretary may repurchase a consol issued under
this Act at market value, but not sooner than 10 years
after the date of issuance. Purchases may only be made
upon the joint agreement of the Secretary and the owner
of a consol. Consols issued under this Act are not callable.
SEC. 8. EXCHANGE STABILIZATION FUND.
Payments on consols issued under this Act to coun-
tries that are in default or arrears on loans from the Ex-
change Stabilization Fund shall be used to cover such
debts.
SEC. 9. REGULATIONS.
The Secretary and the Board of Governors of the
Federal Reserve System may issue regulations appropriate
to carry out this Act.
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