Correísmo insists on its 'Ecuadorian-style dollarization' and raises alarms

The proposals of Correísmo regarding dollarization have once again sparked debate in Ecuador, in the context of the second electoral round that will face Luisa González against President Daniel Noboa. The proposal of an “Ecuadorian-style dollarization,” mentioned by assembly member Paola Cabezas, has reignited concerns about possible attempts to introduce an alternative digital currency.

Cabezas explained in a television interview that the idea is to discourage the use of physical cash and promote mechanisms to generate new dollars through foreign investment. Her fellow party member, Gisela Garzón, complemented the idea by alluding to the circulation of national fractional coins and the use of digital wallets.

However, opponents like assembly member Jorge Peñafiel warned that this proposal is nothing more than a new attempt to revive the failed “ecuadollars” proposed in Andrés Arauz's campaign.

The Ecuadorian Business Committee rejected Correísmo's proposal and reaffirmed its support for dollarization due to its role in the country's economic stability. In a statement, it demanded that monetary proposals be technical and not politicized, warning that any uncertainty about the system could affect confidence in the national economy.

Meanwhile, President Daniel Noboa described Correísmo's proposal as a “trap”, warning that the intention to designate the dollar as the official currency in the Constitution could open the door to a parallel electronic currency that facilitates the devaluation of dollars in circulation.

Former President Rafael Correa has been an outspoken critic of dollarization, calling it the “biggest economic policy mistake” of the country. In 2021, his presidential candidate Andrés Arauz proposed digital ecuadollars to prevent capital flight. Additionally, in 2023, Correa supported the Grupo de Puebla's idea of reducing global dependence on the dollar in favor of a basket of international currencies.

Despite Correísmo's attempts to present a stance of defending dollarization, their background and current proposals raise doubts about a possible covert dedollarization. With the second round on the horizon, the debate over monetary stability becomes a key factor for the electorate.