Ecuador and Dollarization

Paper Summary:

The country of Ecuador has, over the past several years, seen its economy reach crisis level, resulting in the devaluation of its currency, the closing of many schools, a crisis in confidence by both Ecuadorans and people in many other countries and substantial political upheaval as the government has repeatedly " and rapidly " changed hands. The causes for the country's economic failure are complex and interlinking. This paper examines one of the most important causes - the country's exchange rate and the relationship between the its economic situation and the dollarization of the economy (the extensive use of the U.S. dollar alongside or instead of the domestic currency).

From the Paper:

"One possible solution to the country's economic problems (although this may only be a short-term one) is dollarization. In large measure because of the ways in which Ecuador's economy has been weakened through international banking policies (including those instituted by both the IMF and the World Bank), Ecuadorans have for several years sought refuge in the process of dollarization a move that was initially at least made out of desperation. The move to dollarization was made in part because of problems internal to Ecuador's economic situation and in part due to a domino effect common in Latin America in which problems in one country spill over to others. "

More papers on Ecuador and Dollarization:

• Essay # 51843 : "Ecuador and Dollarization"
• Research Paper # 51346 : "Ecuador: The Road to Dollarization and Beyond"
• Essay # 2407 : "Dollarization and the Ecuadorian Economy"

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