Ecuador Accepts Dollar as Its New Currency

Q U I T O, Ecuador, Sept. 9, 2000 -- Ecuadoreans waved goodbye to their national currency, the sucre, today, lamenting the loss of a national symbol but also optimistic that the adoption of the U.S. dollar will usher in a new period of stability.

While some held mock burials to protest the death of the 116-year-old sucre, other Ecuadoreans praised the Andean country’s “dollarization” as a way to bolster an economy that nearly collapsed last year.

“I think this is great. We finally have a stable currency,” said Mercedes Gutierrez, one of over a hundred people standing in line at a shopping mall to change their last sucres into dollars. “This will help the country grow.”

Now It’s Official

As of Sunday, the dollar will replace the sucre as Ecuador’s main currency, capping the first phase of the shock move announced in January.

Only a few new dollar-pegged sucre coins will change hands with the newly minted pennies, nickels, dimes and quarters that have slowly flooded the country since April when the exchange began. Although prices will be officially in dollars, Ecuadoreans will be able to exchange their sucres for dollars until March.

“This is a good thing for the long term. Everything should stabilize,” said Christian Mora, a 21-year-old student.

Curbing 60 Percent Inflation

President Jamil Mahuad announced Ecuador’s dollarization in January following the country’s worst economic crisis in decades. The economy contracted 7.5 percent in 1999, inflation was Latin America’s worst at over 60 percent, and the sucre lost two-thirds of its value.

By scrapping the beleaguered sucre for a more stable greenback, Mahuad hoped he could stabilize inflation and draw investment back into the country, kick-starting the economy and creating jobs for impoverished Ecuadoreans. But Mahuad was ousted in a January coup and replaced by his vice president.

So far, inflation has slowed after an initial jump in prices and the economy is expected to grow between 0.5 and 1 percent this year. But economists say dollarization is still a work in progress that must be backed up by a long list of reforms to guarantee a smooth flow of dollars into the country.

Some other countries with similar monetary systems, like Argentina, which pegged its peso to the dollar in 1991, have had a tough time making the measure work.

What About Identity?

On an emotional level, not everyone was cheerful about replacing national heroes on their currency with U.S. historical figures like George Washington and Abraham Lincoln. Polls have also shown that many oppose the measure because they do not understand it.

“This is a sad day in Ecuador’s history. The country is losing its traditional currency, the sucre, and officially adopting an alien one, the dollar,” the El Comercio newspaper in its main editorial.

About 200 artists and actors carrying anti-dollarization posters held a mock burial of Antonio Jose de Sucre, a revolutionary war hero after whom the currency is named. Radio stations have held commemorative programs all week.

One of the country’s largest indigenous groups has called for a strike to protest dollarization and a series of other economic reforms.

Carlos Aldrade, an elderly taxi driver, was simply worried he wouldn’t know how to make correct change.

“See this. This is 1,000 sucres. But I’m not sure what this is,” he said, thumbing a nickel.