The costs of even a fully credible full dollarization policy are also clear: they are that the exchange rate is no longer available as an adjustment mechanism: adjustments that could otherwise be made by allowing the exchange rate to change – and that is the most natural adjustment mechanism to macroeconomic shocks, foreign and domestic – then have to be transferred to domestic prices and wages.
And that generally means a more painful and prolonged adjustment. All this raises the question of what are the costs and benefits of membership in a monetary union, an issue of great future importance to Turkey, and one with which I will conclude this presentation. II.