Most trade is invoiced in very few currencies. Despite this, the Mundell-Fleming benchmarkand its variants focus on pricing in the producer's currency or in local currency. Wemodel instead a ‘dominant currency paradigm' for small open economies characterized bythree features: pricing in a dominant currency; pricing complementarities, and imported inputuse in production. Under this paradigm: (a) the terms-of-trade is stable; (b) dominant currencyexchange rate pass-through into export and import prices is high regardless of destination ororigin of goods; (c) exchange rate pass-through of non-dominant currenciesis small; (d) expenditure switching occurs mostly via imports, driven by the dollar exchangerate while exports respond weakly, if at all; (e) strengthening of the dominant currencyrelative to non-dominant ones can negatively impact global trade; (f) optimal monetary policytargets deviations from the law of one price arising from dominant currency fluctuations,in addition to the inflation and output gap. Using data from Colombia we document strongsupport for the dominant currency paradigm.