Dollarization days numbered in Ecuador?

In January 2000 Ecuador adopted the US dollar as the national currency in a bid to bring fiscal policy and inflation under control. The country has been coming under increasing balance of payments pressures and is looking for some way to manage the challenge — the problem with dollarization is that you can’t just ‘print’ more dollars if you run short, unless you are the US. Bloomberg wire is reporting that President Rafael Correa has just won approval from Congress for the creation of a type of ‘electronic’ money that can be used for making payments within Ecuador. There is uncertainty about what exactly this means and if it will be used, but one interpretation is that it is the first possible step in a de-dollarization of the Ecuadorian economy.

3 Comments

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3 responses to “Dollarization days numbered in Ecuador?

  1. The Ecuadorian President, Rafael Correa has been very clear about this topic. This new optional payment method will operate through electronic transactions using cell-phones. The aim is to expedite transactions and reach social sectors that are excluded from the banking system. Every electronic dollar must be supported by a physical dolar. In addition, electronic money will allow the State to save about 3 million dollars annually because the reduction of notes replaced due to deterioration. This model has been adopted in other countries as well as a way of ruduecing financial costs

    More details can be found here: http://www.andes.info.ec/es/noticias/dinero-electronico-ecuador-preve-dinamismo-financiero-ahorro-estado.html

    Saying that it is a de-dollarization step shows the lack of knowledge of the authors about Ecuador’s reality.

  2. I completely agree with Andrés Salvador, nothing has been said about de-dollarization in Ecuador, however it is not the first time this topic is addressed around speculations. Any statement as such should be supported by technical arguments and a clear knowledge of Ecuador´s economy and policies.

  3. Maria Garcia

    I completely agree with Andrés Salvador, nothing has been said about de-dollarization in Ecuador, however it is not the first time this topic has been addressed around speculations. Any statement as such should be supported by technical arguments and a clear knowledge of Ecuador´s economy and policies.

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