I’ve arrived to Ecuador, which means no more mental calculations from local currency to dollars, no more eyeing the exchange rate before ATM visits, no more guiltless Monopoly money binges on empanadas & jugos naturales. Ecuador’s local currency is the U.S. dollar.
Several countries have adopted the U.S. dollar as their official currency, including the British Virgin Islands, El Salvador, Marshall Islands, Federated States of Micronesia, Palau, Turks and Caicos Islands, and Bermuda. For island nations, such as Bermuda, its just convenient—why mint money for just 68,000 people? For others, such as El Salvador, the switch was an attempt to control rampant inflation. The U.S. dollar—until recently—was a safe bet afterall.
East Timor, Panama, and Ecuador also have Georges floating around, but prefer to mint their own coins. Here in Ecuador I’ve received handfuls of change, half U.S. pennies and nickels, half Ecuadorian 50 and 25 cent coins. Below is some background as to why the Ecuadorian government went Greenback:
“Deteriorating economic performance in 1997-98 culminated in a severe economic and financial crisis in 1999. The crisis was precipitated by a number of external shocks, including the El Niño weather phenomenon in 1997, a sharp drop in global oil prices in 1997-98, and international emerging market instability in 1997-98. These factors highlighted the Government of Ecuador’s unsustainable economic policy mix of large fiscal deficits and expansionary money policy and resulted in a 7.3% contraction of GDP, annual year-on-year inflation of 52.2%, and a 65% devaluation of the national currency, the sucre, in 1999, which helped precipitate a default on external loans later that year.
On January 9, 2000, the administration of President Jamil Mahuad announced its intention to adopt the U.S. dollar as the official currency of Ecuador to address the ongoing economic crisis. The formal adoption of the dollar, as opposed to merely pegging the sucre to the dollar as Argentina had done, theoretically meant that the return from seigniorage would accrue to the U.S. government. Subsequent protests related to the economic and financial crises led to the removal of Mahuad from office and the elevation of Vice President Gustavo Noboa to the presidency. However, the Noboa government confirmed its commitment to dollarize as the centerpiece of its economic recovery strategy.” (Wikipedia)
There you go. Next time you’re caught sneaking peeks at mebobandsurly.com at work, tell your boss we’re not only fun, we’re educational.