Explanation:

• Option A is correct because dollarization involves a country adopting another nation's currency as its medium of exchange and unit of account, relinquishing control over its monetary policy.

• Option B describes a monetary union, not dollarization. In a monetary union, member countries share the same legal tender, but dollarization specifically refers to the unilateral adoption of another country's currency.

• Option C refers to a currency board arrangement, where a country commits to exchanging domestic currency for a specified foreign currency at a fixed rate. This is distinct from dollarization, which involves full adoption of the foreign currency without such a commitment.

This question tests the candidate's understanding of exchange rate regimes and their implications for international trade and capital flows.