Former president of Ecuador Jamil Mahuad remembers why and how Ecuador adopted the U.S. dollar as its own currency in January 2000.
Ecuador’s economy had been hit by the worst crisis on record and inflation was ramping up while the banks were failing. The country received very little help from international credit organizations as the local sucre was losing value rapidly. Mahuad and his team proposed to implement something that had never been tried before and the government announced the dollarization of the economy against the will of the local Central Bank and the IMF.
The switch to the dollar was effective in stabilizing the economy and lowering inflation and credit rates.