Ecuador’s president tried to kill the dollar. Here’s what that means for Venezuela, Argentina and the Rest of Latin America
Source: Fortune ·
Longtime dollarization foe Rafael Correa spent a decade attempting to dismantle Ecuador’s dollarized system. It survived him and South America’s Pink Tide.
From the source
Ecuador’s experience with dollarization matters beyond Quito. The possibility of mothballing local currencies and replacing them with the dollar is a hot topic in Latin America. It’s also on the agenda in Washington, D.C., where there is renewed interest in promoting the use of the greenback. Ecuador is an ideal natural experiment in how a dollarized system holds up against a hostile government. Rafael Correa, who holds a PhD in economics from the University of Illinois, opposed dollarization before it was adopted in Ecuador and before he became president. He led the country for a decade but could not dismantle Ecuador’s dollarized system because it produced excellent results and garnered widespread public support. The collapse In 1999, Ecuador’s sucre began a catastrophic plunge. At the end of 1998, it traded at 6,825 sucres to the U.S. dollar. By the end of 1999, it had plunged to 20,243 sucres to the dollar, losing two-thirds of its value against the greenback in one year. The…