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In economies where the purchasing power of US Dollars is countercyclical, savings tend to be denominated in Dollars.
In these economies, dollar savings provide insurance against income fluctuations
We characterize the candidate equilibria using a best-response strategy. Each banker decides how much deposit to issue, for which they need to form beliefs about aggregate prices, which have not realized yet. Then bankers considers how much deposits other bankers issue and contemplates a best-response to each potential level of aggregate deposits.
Since all bankers are identical, candidate equilibria are the points where best-response functions coincide.
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