Countries which have swapped their national currency for the US dollar have not found the strategy to be an immediate success. Monica Campbell reports.The idea of dollarising a nation’s economy is considered either a political impossibility or a high-stakes policy gamble. But, in recent years, two Latin American countries, El Salvador and Ecuador, have taken the leap. Each came to the US dollar under distinct circumstances and their performance so far under the greenback is mixed.
On New Year’s Day 2001 El Salvador became the third Latin American country – along with Ecuador and Panama – to exchange its currency, the colón, for the dollar. Cash machines spat out dollars and bank accounts were converted. The changeover was rapid. Lawmakers had only passed the dollarisation legislation on November 30th 2000, following a publicity blitz using the slogan “Good for you, good for the country”. Some convincing was in order. The idea of dumping the colón, a national symbol, for the “Yanqui” dollar made some Salvadoreans wince, as memories were still fresh of the US funding the notorious right-wing government during the civil war in the 1980s.
