On January 1, 2001, the dollar was raised as a local currency. After all, we are looking for opportunities for the national economy.
January 1, 2001 officially announced the dollarization in El Salvador. After an intense political debate about its sales and adventures in the salvadoran economy, the trade commenced circular the first tickets sold at the official exchange of a dollar for 8.75 colons.
Although initially the country has a “bimonetarism” during the first months, the preference for the American monde is extended rapidly and the demand for the colonies is eliminated little by little.
Once again, the dollar has been converted into the main currency of the exchange in the country and only the governor of the FMLN has the intention of eliminating it, his debts are more than the money of the local currency.
You may be interested: The bitcoin has surpassed the first time in its history of 30,000 dollars
These are some of the main principles that the dollarization, says Manuel Enrique Hinds, is known as the father of the dollarization has been promoted in this economic change.
1. Lower inflation. With the dollar bill, inflation in El Salvador now has one of the lowest rates in Latin America. This means that the variation in consumer prices seems to be stable. In countries such as Venezuela, with their own money, inflation has risen by more than 300% on the increase in the devaluation of its currency. In El Salvador, the most recent data from the Central Reserve Bank shows that inflation has fallen by 1%. November inflation was negative: -0.2%.
When the dollarization is implemented, the retailers will redistribute it by translating the prices of colonies into dollars. But with all the odds, that there was a temporary phenomenon, the inflation rate in this year was only 3.8%.
2. Tasas of interest more bajas. The case of interest of priests is most common in the dollarized and not increased when the dollar devalues. Prior to the dollarization, interest rates such as mortgage rates between 15, 20 and up to 30%. With the dollar bill, these dollars are at the dollar level and the loans for living cayeron are at 9% and up to 7%. In addition, interest rates are lowered than most established ones.
3. We present a large plaza vestig. The dollarization allows the banks to place large amounts in the month in which the salaries and prices are denominated. Prior to the dollarization, mid-term and long-term credit loans, as in other countries, denominated in dollars, each generates a very serious exchange rate. If the column is devalued, the amount in columns of dollar credits increases proportionately, arranging with grave losses to the performers and the different banks. With the dollarization the performers can take long-term loans without exposure to this risk.
Read more: $ 1,000 million travel opinions in 2020
4. Disappearance of market segmentation. Prior to the dollarization, the small companies and the tenant media class that have performed in colonies mean that the tenant guarantees in dollars can perform in this month at lesser costs. The dollarization will help to level the competence between various training companies.
5. Politicians can not use the month at their convenience. The dollarization gives politicians the power to inflate the economy in the process of printing money, with the institutionalization of a low inflation rate and the confidence of investors in their exploits and capital not seriously devalued.
6. I started the exports. There is an idea that dollarized countries have problems to increase their exports because they can devalue their currency. In reality, dollarization has led to lower exports and lower interest rates and the cost of capital. This, however, is the security of which has not been populist manipulations of the world, has neglected the attraction of investing in the country.
El Salvador has not been devalued since 1992 and its embargo on exports has increased more than those of the mayor of Latin America since that time.
7. Better response to the crisis. It is said that the dollar is being devalued because its central bank is unable to issue money to counter a crisis. The world is that the countries not dollarized tampoco can issue money without losing reserves in dollars. In the crisis all need dollars, the dollars and the dollars not, the way that ultimately exists. On the other hand, the dollarization reduces the risk of capital flight to eliminate the risk of devaluations, which erodes the reserves more