Ecuador’s Noboa Reaffirms Dollarization Ahead of Election

Ecuador’s President Daniel Noboa has reaffirmed the US dollar as the nation’s sole currency through Executive Decree No. 565, in light of growing political pressure ahead of the April 13 election. The decree aims to strengthen dollarisation, countering proposals for alternative currencies. Noboa’s initiative includes proposed constitutional amendments to consolidate monetary policy control under the Executive Branch.

In the face of growing concerns surrounding Ecuador’s economic future, President Daniel Noboa has formalized the US dollar as the exclusive official currency through Executive Decree No. 565. Issued from Cuenca on March 18, the decree asserts that the “United States dollar [is] the monetary unit and sole official means of payment in the Republic of Ecuador.” Noboa has urged his National Democratic Alliance (ADN) party to initiate constitutional amendments to ensure that monetary policy remains under the control of the Executive Branch via the Central Bank.

During an interview with Radio W, President Noboa articulated that the decree seeks to “strengthen dollarisation” in light of opposing political proposals. He criticized former president Rafael Correa’s movement for discussing alternatives such as “Ecuador dollars” and electronic currencies, asserting that these options undermine the established dollarized economy. The decree emerges just before the crucial presidential election runoff on April 13, featuring Noboa and leftist candidate Luisa González, a protégé of Correa’s Citizen Revolution movement, often perceived as advocating for alternatives to the dollar.

The proposed constitutional reform would mandate that all monetary transactions and financial operations must occur in US dollars, explicitly barring the Central Bank from issuing any other currency. Additionally, it would prevent the bank from financing public sector institutions directly or indirectly. This initiative aligns with Noboa’s goal to solidify support amidst electoral tensions, countering remarks from leftist assemblywoman Paola Cabezas, who suggested the need for an “Ecuadorian style” of dollarisation.

In response to Cabezas, González has distanced herself from the proposals, asserting that her party does not intend to abandon the dollar. Critics, such as Mateo Villalba, former manager of Ecuador’s Central Bank, view the decree as politically motivated and unnecessary, emphasizing that dollarisation is already established by law. Since adopting the US dollar in 2000 in response to a severe financial crisis, Ecuador’s dollarisation has provided relative monetary stability despite external economic challenges, according to the central bank.

In summary, President Daniel Noboa’s recent decree aims to reaffirm the US dollar as Ecuador’s sole official currency amid election uncertainties. This decree is part of a broader strategy to combat opposition initiatives that suggest alternatives to dollarisation. As tensions rise ahead of the upcoming presidential runoff, the proposed constitutional reforms highlight the contentious nature of monetary policy in Ecuador, underscoring the significance of maintaining dollarisation in the face of political challenges.

Original Source: www.intellinews.com