US economists warn about dollarization and set Ecuador as an example

Regularly, Ecuador is used as an example by those who propose this solution for the national economy, but: did it solve that decision, their underlying problems?

In this context, in which the candidates for the Presidency debate this way out as the solution to all the ills of the national economy, various voices, both local and international, have exposed its risks.

Robin Brookshead of the Institute of International Finance, pointed out in a first tweet that the dollarization of Argentina “this is a terrible idea”, to later, in another post, point out the mistake that Ecuador made in doing so.

“Argentina: Dollarization is a terrible idea, the last time this was tried it ended in a huge devaluation that rules it out forever,” wrote the also former F official.International Monetary Fund and of Goldman Sachs.

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In his other tweet, Brooks warns that while Argentina debates dollarization and uses Ecuador as “a success story”, “when it’s not. The result is a weak growth and an overvalued currencywhich is the trap from which Argentina is trying to escape”.

Dollarization: more criticism from the US

In that same expression Mark Sobel, former Treasury official, who noted that dollarization “may sound attractive,” but “it is not the answer to the country’s problems.”

For the former IMF official, “Argentina must focus on the hard work of stabilization and liberalizationsince: “Like the “convertibility plan”, linflexible “no way out” dollarization could create a far worse convulsion”.,

“With dollarization, the growth of Argentina will depend on a current account surplus and capital inflows. This can be achievable with strong global growth, high commodity prices, attractive investment, strong rule of law and an undervalued currency,” she added.