How would you like to visit a country in South America and pay with U.S. Dollars?! In the late 1990’s, Ecuadorians basically dollarized their own economy after a financial collapse and the government simply made it official on Mar 13, 2000. You can also watch and share this video on Facebook and YouTube.
Ecuador is not alone in ditching their currency for another. They are one of 9 countries in the world to recognize the USD as their official legal tender. Plus, although the USD isn’t technically the official currency, it’s considered legal tender and is widely adopted in Afghanistan, Bolivia, Cambodia, Costa Rica, Guatemala, Lebanon, Macau, Myanmar, Panama, Paraguay, Peru, Philippines, Uruguay, and even North Korea.
The benefits to dollarization are a strong and stable currency which results in outside investor confidence that can benefit a country’s entire economy. But there are some downsides. For one, your monetary value is controlled by the Federal Reserve who put the needs of USA ahead of any other country who uses their currency in regards to when they increase or decrease interest rates and/or add more money into circulation. And second, the cost of converting from a former local currency into the US Dollar has historically resulted in prices being rounded up, which causes rising costs for locals.
There are many financialists who are proponents of a world wide currency, but we’ve all seen how that worked out for the European Union. In our lifetime, however, money as we know it will change as we continue to evolve into a global economy and technologies like cryptocurrency experience widespread growth and mass adoption.
Based on the money in my hand, what country do you think I’m traveling?
If you guessed the United States, well, you’re wrong.
I’m actually in Ecuador where the United States Dollar has been the official legal tender since March 13, 2000.
Ecuador made the switch to USD after a financial crisis that saw its own former currency, the sucre, collapse so badly that people started putting their holdings into dollars, unofficially dollarizing the country’s economy. The government simply went ahead and made the switch official.
All paper currency in Ecuador comes from the USA, but coins are still minted here in Ecuador to avoid the expense of shipping huge quantities of quarters, nickels, dimes, and pennies into the country. They’re called centavos and they’re needed in Ecuador because the cost of most goods here have to be expressed in fractions of dollars.
What’s even crazier is that Ecuador is not alone in ditching their currency for another. The U.S. dollar is also the official currency of East Timor, El Salvador, the Federated States of Micronesia, The Marshall Islands, Palau, The Caribbean Netherlands, Panama for their banknotes, and one of Zimbabwe’s eight official currencies in circulation.
And that’s just the USD. Over 50 countries around the world don’t print their own currency and for the most part are dependent on the USD, the Euro, and the Australian dollar.
Traveling to Ecuador from USA is simple. No currency conversion is required. Just be sure to bring small bills, because no one wants to accept your $20!