How to De-Dollarize

Published in El Comercio
(Ecuador) on 15 August 2014
by Alfredo Valdivieso Gangotena (link to originallink to original)
Translated from by Henry Luis Rentas. Edited by Bora Mici.
With this title, the well-known economist Walter Spurrier published his article on Aug. 12. Among other reflections, he commented that “Dollarization is not universally popular among economists because dollarization takes away from the Central Bank's ability to issue and thus regulate the circulating medium and finance the government's budget....”

Allow me to refute in part this assertion, mentioning that evidently, before putting into practice the adoption of the North American dollar, many economists were against the adoption of this foreign currency because the use of the dollar signified the imposition of a “straitjacket." It diminished the mobility of the monetary authorities, not allowing them to issue paper money; they lost the sovereign right to mint money; they have stopped taking advantage of seigniorage revenue; they lost the authority to devalue the currency with the object of helping increase national exports, etc.

In one of the debates that we had at San Francisco University about the convenience or lack thereof of continuing with the United States’ monetary system, Rafael Correa Delgado and the undersigned, against two other colleagues of the same university, defended the exit of the dollar since in those years — this was in 2002. There was not sufficient currency to support the dollarization; the high prices for a barrel of oil did not exist, but began to increase at the end of 2003, producing enormous income for the Ecuadorian treasury and making possible the “lubrication” of the monetary system with the enormous influx of dollars. In addition, President Jamil Mahuad threw himself into adopting the dollar without having preliminary studies. “Days before, I had said that dollarizing the economy would be like throwing oneself into the ocean without knowing how to swim.”

The increase in prices for oil barrels supports dollarization. The economists who were against the use of a foreign currency had now changed their opinion, strengthened by the fact that the American currency had depreciated with respect to the currency of those countries that import our goods over several years, which had helped with the increase in our exports. However, I believe that the economist — now president — Rafael Correa never liked continuing with dollarization, but the touch of the benefits of this monetary system and the support of the Ecuadorian citizens had obligated him to continue in the same manner taken by former President Mahuad and continued by former President Gustavo Noboa Bejarano.

It is worth mentioning, making a comparison, that we happily did not have the same bad luck as Argentina, which adopted the Currency Board in 1990: 1 peso = 1 U.S. dollar. This method of payment increased in value enormously between that year and 2000; consequently, the peso increased its value and its products increased in price opposite their trading partners. Argentina found itself obligated to devalue its currency — 1 U.S. dollar = 4 pesos — and its system failed.


Columnista invitado

Con este título el conocido economista, Walter Spurrier publicó su artículo el 12 de agosto. Entre otras reflexiones comentó que “ la dolarización no es universalmente popular entre los economistas por el hecho que la dolarización quita al Banco Central la capacidad de emitir y así regular el medio circulante y financiar el presupuesto del Estado…”.

Me permito refutar en parte este aserto, mencionando que, evidentemente, antes de poner en práctica la adopción del Dólar Norteamericano, muchos, economistas estábamos contra la adopción de esta moneda extranjera, por el hecho de que el uso del Dólar significaba el imponerse una “camisa de fuerza”, restaba maniobrabilidad a las autoridades monetarias, al no poder emitir papel moneda; se perdía el derecho soberano de acuñar moneda, se dejaba de aprovechar los ingresos del señoraje; se perdía la facultad de devaluar la moneda con el objeto de ayudar a incrementar las exportaciones nacionales, etc.

En uno de los dos debates que tuvimos en la Universidad San Francisco acerca de la conveniencia o no de seguir con el sistema monetario estadounidense, Rafael Correa Delgado y el suscrito, contra otros dos colegas de la misma universidad, defendimos la salida del Dólar puesto que en esos años (estábamos entonces en 2002), no había suficientes divisas para sostener la dolarización; no existían los altos precios por barril de petróleo que a partir del 2003 empezaron a incrementarse, produciendo enormes ingresos al tesoro ecuatoriano y que hicieron posible la “lubricación” del sistema monetario con la enorme afluencia de dólares. Además, el Presidente Jamil Mahuad, se lanzó a adoptar el Dólar sin tener estudios previos. “Días antes había dicho que dolarizar la economía sería como lanzarse al mar sin saber nadar”.

La subida de los precios por barril de petróleo sostiene la dolarización. Los economistas que estábamos contra el uso de la divisa externa cambiamos de opinión, reforzados con el hecho que la moneda estadounidense se ha depreciado respecto a las monedas de los países importadores de nuestros productos durante varios años, lo que ha ayudado al aumento de nuestras exportaciones. Sin embargo, creo que al economista (ahora Presidente) Rafael Correa nunca le gustó el continuar con la dolarización, pero, el palpar los beneficios de este sistema monetario y el apoyo del ciudadano ecuatoriano, le han obligado a continuar con la medida tomada por el expresidente Mahuad y continuada por el expresidente, Gustavo Noboa Bejarano.

Vale mencionar, haciendo una comparación, que nosotros, felizmente, no tuvimos la mala suerte de Argentina que adoptó la Caja de Conversión en 1990 (un Peso=un Dólar). Este medio de pago se revalorizó enormemente entre ese año y en 2000, consecuentemente, el Peso incrementó su valor, sus productos se encarecieron frente a sus socios comerciales. Argentina se vio obligada a devaluar su moneda (un Dólar = 4 Pesos). Y su sistema fracasó.
This post appeared on the front page as a direct link to the original article with the above link .

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