Dollarisation of Ecuador

InsightSur.com ^ | February 3, 2012 | InsightSur Editor

[InsightSur]

Due to economic instability, in January of 2000, then Ecuadorian President Jamil Mahuad instituted a policy instating the United States dollar as the official currency of Ecuador.

Despite disapproval of the policy by current Ecuadorian President Rafael Correa’s administration, no plans are currently in the works to replace the US dollar as the official currency. However, the administration has indicated that it would replace the US dollar in favor of a South American currency if one became available.

The dollar replaced "sucres" in Ecuador, at a rate of 1 for every 25,000 sucres.

While Ecuador has officially replaced their own currency with the US dollar, the country still issues "centavo" coins, which are identical to their US counterpart. Interestingly, these coins are not actually made in Ecuador, rather, they are minted by the Royal Canadian Mint as well as the Casa de Moneda de Mexico.

[InsightSur]

Apparently Panama and El Salvador also us the US Dollar.

[ExCTCitizen]

Despite disapproval of the policy by current Ecuadorian President Rafael Correa’s administration, no plans are currently in the works to replace the US dollar as the official currency. However, the administration has indicated that it would replace the US dollar in favor of a South American currency if one became available.

There'll be a South American currency soon... the GREENBACK!! It would be nice if the greenback (backed by gold) would be the offical currency of the Americas...

[NorthStarStateConservative]

Frying pan.. Fire..

[1rudeboy]

Nope . . . more like: Fire. Frying pan.

[InsightSur]

Given that Panama and El Salvador also use the dollar, it seems that the trend is in that direction. However, I believe the US treasury is weakening the dollar’s global value through “quantitative easing” which will cause inflation.

“Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.”

- Milton Friedman

That won’t help the dollar’s case.

[Poison Pill]

I believe the US treasury is weakening the dollar’s global value through “quantitative easing” which will cause inflation.

This will be offset if South American or other countries in the world soak up the excess dollars by abolishing their own currencies and adopting the greenback.

[BRK]

I did not know there were any countries besides USA using dollars as official currency. Learning moment!

[RushingWater]

This will be offset if South American or other countries in the world soak up the excess dollars by abolishing their own currencies and adopting the greenback.

This is our gov't biggest crime, taking the most valuable asset of the US and destroying. We could have $1.50 gas right now, but instead we have bankrupt Solyndra's.

[onyx]

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[SAJ]

There are a number of LatAm countries in which the USD is "side-by-side" the local currency, readily spendable at a known rate. These include Belize, Costa Rica, many of the Antilles, and to some extent Columbia.

Soon-To-Be-Expat

[BfloGuy]

The dollar is no more a fit for Ecuador than the Euro is for Greece. As the world's reserve currency, the dollar is always overvalued. America's industrial potential has been a victim of that, but the economy is large enough to *somewhat* overcome it.

Ecuador can't. They just don't trust their own politicians to stablilize their own currency. Of course, neither can we.

[SunkenCiv]

Thanks InsightSur, and for that additional info — in Panama, “the Balboa has had a fixed exchange rate of 1:1 with the US dollar since 1903”, and El Salvador used to use the Colon, which had a fixed value I think, but adopted the US$ in 2001.