Crisis and Dollarization in Ecuador

Book excerpt: Early in 2000, Ecuador, in response to a serious economic and governance crisis, adopted the U.S. dollar as its national currency. This publication examines the economic conditions leading upto this action (including rising inflation, government intervention in the banking system and large fiscal deficits), describing the repeated cycles of crisis and failed stabilisation that fatally undermined confidence in the Ecuadoran sucre. It then goes on to analyse the initial results and its effects on inflation, growth, poverty, inequality, marginalisation and gender, as well as placing Ecuador's experience with dollarisation in an international perspective.