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Not only has leading presidential candidate Andrés Arauz emphasized that he is committed to maintaining the dollar as the national currency, he and his party have a long track record of taking strong measures to make sure that dollarization did not come under threat.
As economists, we share a general concern when economic issues are widely misunderstood in political debates that can determine policy, sometimes with lasting consequences. This appears to be a problem in Ecuador at the moment, in the heat of an election campaign.
Media reports have repeated, without any evidence, false allegations about the economic program of one of the presidential candidates. Andrés Arauz, a former minister and Director General of the Central Bank who is currently leading in most polls, has been accused of seeking to abandon the country’s current use of the dollar as its national currency. There is no evidence that he or his political party would do anything at all in this direction.
A transition from the dollar back to a national currency would be costly and involve risks that would be exacerbated by the current dire and precarious economic situation. This false allegation is clearly an attempt to scare voters, and indeed those promoting it have warned of a resulting economic collapse if the dollar is abandoned.
In fact, not only has Arauz emphasized that he is committed to maintaining the dollar as the national currency, he and his party have a long track record of taking strong measures to make sure that dollarization did not come under threat. These included reforms which kept billions of dollars within Ecuador, such as taxing capital leaving the country, financial regulation—including regulations on foreign banks within the country—increased accountability of the Central Bank; and other reforms and policies that kept the economy stable and avoided crises for the 10 years of the Rafael Correa presidency (2007 to 2017).
These policies and reforms prevented even the slightest threat to Ecuador’s commitment to the dollar, even when Ecuador was hit hard by the world recession of 2009,