DOLLARIZATION

NAME: Alex Paul Carrera Herrera LEVEL: Elementary 4

DATE: August 15, 2014 SCHEDULE: 7-9am.
ABSTRACT
In 1884 Ecuador decided to establish the Sucre as their national money, and
the people remembered their independence hero Antonio Jose de Sucre. The
Sucre money suffered much devaluation that it became a big problem, because
the monetary system had inflation, and high interest rates. For that reason the
government decided to change their monetary system.
The new monetary system was implanted on Sunday, January 9, 2000 for the
president Jamil Mahuad.
The new system produced that the change of the national money to dollar
changed of 5000 sucres to 25000 sucres. The Ecuadorian people lost
purchasing power and their money in the banks was devaluation.
The new monetary policy was hard but let stabilize the economy in the country
in a moment that the inflation was uncontrollable.
The Ecuadorian people did not like to change their national money to dollar,
because they felt that lose their identity. Ecuador left to make their money and
started to buy dollars to USA. For that reason nowadays Ecuador depend their
monetary system of the USAs monetary system and have a potential situation
in the international market because another countries see clean rules for their
imports and exports.
In 10 years the inflation decreased of the 90% to 3.5% and the imports
increased of 2000 million dollars to 6000 million dollars. For this reason some
economist thinks that the dollarization brought trust, credibility and investments
inside of the national economy.
Nowadays the Ecuadorian people think that dollarization was good but there are
many economists that think that if the current government decides to change
the money; it is going to bring big problems in the Ecuadorian economy in a little
time.