Dollarization has proven to be an effective pressure release valve in countries beset by severe monetary crises, and Ecuador’s dollarization twenty years ago provides a successful case story of dollarization in action.
Jose Cordeiro, a Venezuelan journalist affiliated with Atlas Network's Latin American partners, has been leading the charge for dollarization in Venezuela since 2015.
The bolivar, the official currency of Venezuela, has depreciated more than 90% in 2019, as socialism and hyperinflation continue to decimate the once prosperous South American nation. The instability of the bolivar has slashed purchasing power within Venezuelan borders, rendering the 150 year-old currency essentially worthless.
“From inside and from outside Venezuela, many freedom supporters have been campaigning to advance dollarization,” he explained. “Thanks to new social networks, we could reach thousands of freedom-fighters in Venezuela.” Similar to the campaign in Ecuador in 2000, Cordeiro utilized Facebook, Twitter, and Instagram to build and connect coalitions of supporters to advocate for real change, reaching nearly half-a-million people. In October 2019, the government informally adopted a dollarization policy and the dollar quickly became the most popular currency in Venezuela. “People love using these American dollars,” explained an excited Cordeiro. “Everybody now uses American dollars in Venezuela. Occasionally people will use the dying bolivar or the petro, which will eventually die too!”
A stack of fifty 100,000 Venezuelan Bolivar notes, worth about $20 USD
Cordeiro's reforms even received the approval from an unlikely actor—Venezuelan president Nicolas Maduro. “I don’t see this as a bad thing...this process that they call ‘dollarization’,” the socialist dictator explained. “It can help the recovery of the country, the spread of productive forces in the country, and the economy. Thank God it exists.”
Cordeiro believes that the dollarization of Venezuela will have a real impact on the national economy. “All Venezuelans, inside and outside of its borders, will benefit from monetary stability,” he explained. “About 30 million people still in Venezuela will see an end to hyperinflation and continuous devaluations; about 5 million Venezuelans who had left the country can now easily send money back, and can even consider returning. When full dollarization is achieved, the economic benefits will translate not only in economic stability, but also eventually into social and political stability.”
Cordeiro was featured in Reason Magazine, where he discussed growing up in Venezuela, and the horrifying changes that occurred after it became a socialist nation.