Ecuador and the Dollar

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In Ecuador they use a different currency. Can you guess what it is? The US dollar, that’s right. Since 2000 they have been using it.

In the 1970’s when Ecuador stumbled upon oil it replaced raw exports such as bananas, cocoa, coffee and shrimp.

The country became dependent on oil and in turn was at the mercy of world market prices.

Then in 1995 Ecuador’s economy crashed: the sucre fell into hyperinflation, the country defaulted on its foreign debt, a brief border war with Peru happened, there was a huge budget crisis with fluctuating export prices and currency devaluations; and to add, series of natural disasters including volcanic eruptions, bizarre weather patterns and earthquakes.

In the 1990’s the economic sate began to really deteriorate. Pretty much Ecuador’s entire banking system collapsed. So the solution? To replace the sucre with the United States dollar. Ecuadorians were not happy about it.

Ecuadorian government began exchanging sucres for dollars at the rate of S/. 25,000 = dollar. The sucre disappeared completely from circulation.

Ecuador’s history is absolutely fascinating and the change to dollar doesn’t even scratch the surface.

On a side note, do you know what other countries officially use the US dollar? El Salvador, Panama, Puerto Rico,The Virgin Islands, American Samoa, Guam, and the US minor outlying islands. There are also 16 “unofficial” countries using the US dollar with Afghanistan, Zimbabwe and Haiti to name a few counties using it.

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