Ecuador’s President Daniel Noboa has reaffirmed dollarization through Executive Decree No. 565, establishing the US dollar as the sole currency. This decree comes amidst presidential election tensions with significant implications for monetary policy. Noboa aims to counter opposition proposals potentially challenging the dollarized economy, asserting the need for constitutional reforms to solidify this framework ahead of the April 13 runoff.
Ecuador’s President Daniel Noboa has reaffirmed the US dollar as the country’s sole official currency through Executive Decree No. 565, amidst election-related tensions and concerns about alternatives to a dollarized economy, as reported by El Universo. Issued on March 18 from Cuenca, the decree emphasizes that “the United States dollar [is] the monetary unit and sole official means of payment in the Republic of Ecuador.” Noboa also urged his National Democratic Alliance (ADN) party to propose a constitutional amendment to consolidate monetary policy within the Executive Branch, managed by the Central Bank.
In a statement, Noboa indicated that the decree’s purpose is to “strengthen dollarisation” in response to opposition proposals. He criticized alternative currency discussions, particularly targeting exiled former president Rafael Correa’s political movement. The decree precedes the significant April 13 presidential runoff, where Noboa contends for reelection against leftist candidate Luisa González, who is perceived by some as advocating for alternatives to the dollar.
The proposed constitutional reform would require all financial transactions in Ecuador to be conducted in US dollars and prohibits the Central Bank from issuing any local or parallel currencies. It also includes a ban on granting funding to public sector institutions in currencies other than the US dollar. Critics, like leftist assemblywoman Paola Cabezas, have suggested alterations to the dollarized system, prompting backlash from Noboa and his supporters.
González has distanced her campaign from her party members’ more radical statements, asserting there is no intention to abandon the dollar. Mateo Villalba, former central bank manager, criticized the decree as politically motivated and unnecessary, highlighting the existing legal framework that supports dollarization established by the Organic Monetary and Financial Code. Noboa’s actions appear designed to strengthen his electoral support prior to the pivotal runoff.
Since its implementation in 2000 during a severe financial crisis characterized by hyperinflation, Ecuador’s adoption of the US dollar has been pivotal for monetary stability, providing resilience against various economic challenges over the past two decades, as noted by the central bank.
President Daniel Noboa’s Executive Decree No. 565 reinforces the US dollar’s status as Ecuador’s sole legal currency while countering opposition proposals for alternative monetary systems. The anticipated constitutional reform would consolidate monetary policy under the Executive Branch, ensuring ongoing dollarization. Criticism of the decree suggests its political motivations amid election tensions, particularly relevant as Noboa seeks re-election against a challenger who may threaten the dollarized framework. Ultimately, the decree aims to foster financial stability amidst changing political dynamics.
Original Source: www.intellinews.com
