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Ecuador News

Ecuador marks the anniversary of dollarization

Wednesday marks the 19th anniversary of the adoption of the U.S. dollar as Ecuador’s national currency. On January 9, 2000 President Jamil Mahuad announced that the country would end the use of the sucre, which at the time suffered Latin America’s highest rate of inflation.

Former president Jamil Mahuad

The national economy had contracted 7.5 percent in 1999 while inflation, at times, topped 100 percent. Mahuad hoped his order would stabilize the economy and attract foreign investment but was not around to preside over the very slow economic recovery that followed. He was removed from office January 21 by the national congress and replaced by his vice president, Gustavo Noboa.

Since his election in 1998, Mahuad’s popularity had dropped from 63 percent to six percent and the country was reeling from mass protests against his policies.

The conversion to the dollar was highly controversial as bank accounts were frozen and the sucre was drastically devalued prior to the change, leaving many Ecuadorians with little savings. Guayaquil newspaper El Universo reported that more than 200 people committed suicide in the months following the conversion due to financial loses.

More than 20 banks went out of business in 1999 and 2000, causing further loss and hardship. Several prominent bankers fled the country, most of them settling in Miami.