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 theadoption of the U.S. dollar will usher in a new period ofstability.

While some held mock burials to protest the death of the116-year-old sucre, other Ecuadoreans praised the Andeancountry’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 peoplestanding in line at a shopping mall to change their last sucresinto dollars. “This will help the country grow.”

Now It’s Official

As of Sunday, the dollar will replace the sucre asEcuador’s main currency, capping the first phase of the shockmove announced in January.

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

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

Curbing 60 Percent Inflation

President Jamil Mahuad announced Ecuador’s dollarization inJanuary following the country’s worst economic crisis indecades. The economy contracted 7.5 percent in 1999, inflationwas Latin America’s worst at over 60 percent, and the sucre losttwo-thirds of its value.

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

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

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

What About Identity?

On an emotional level, not everyone was cheerful about replacing nationalheroes on their currency with U.S. historical figures like GeorgeWashington and Abraham Lincoln. Polls have also shown thatmany oppose the measure because they do not understandit.

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

About 200 artists and actors carrying anti-dollarizationposters held a mock burial of Antonio Jose de Sucre, arevolutionary 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 calledfor a strike to protest dollarization and a series of othereconomic reforms.

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

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