Expat Community > Ecuador

boncur
Joined 2009
Posts: 1180

Ecuador to Replace U.S. Dollar?

13 years ago

Every now and then we hear rumors of Ecuador wanting to get rid of the U.S. Dollar, and there was a grain deal between Venezuela and Ecuador a year or so ago (UNISUR--the trading among S.A. Countries) using the "new sucre"--also pegged one to one dollar. I haven't heard too much else about that So. Amer. currency.

Gary's Scott's missive today touches on this new form of currency that is being tried down around Cuenca, in the parroquia of Sinincay and San Joaquin. It is called UDIS (Unidad de Intercambio Solidario). It is now pegged one to one (U.S. Dollar) and appararently they are giving a 20% discount for using it--this part I do not understand. So it is being used in the Money Cooperatives, which are not really banks, but more lending and 'investment' institutions and can be started by virtually anyone with money, and this is where the poorer people get their loans, esp. agricultural.....There are so many of these cooperatives in Ecuador, mostly all Indian owned and Indian money, at least in our neck of the woods......sometimes high interest is paid, much higher than in banks, neither of which have any guarantee or insurance or backing for your money...No FDIC here.

The Salasaca Tribe down around Ambato who are master weavers, the Otavalos purchse their weavings to re-sell, even have a "money cooperative" here in town! Again, customers at these institutions are almost always Indians.

We were offered about 10% on about 50 grand for a year by one of these Indian-owned Cooperatives, sounds good, but there is great risk, and you have no recourse at all if your money somehow disappears.

So, regarding the UDIS, if you are a food vendor, you can charge this sky blue and purple currency with a Lion on it, and then use it to pay off your loans as well as other uses that were not made totally clear... I also do not think that we will see a whole lot of press about this right now, so as not to alarm the people...a run on the banks here would cause alot of trouble. People fear what they do not understand.

I believe that this just might be the start of the inevitable. And it is pegged one on one now, But later? I doubt it. I would not have alot of U.S. Dollars in banks down here now. I mean, your whole life's savings.......You never know that perhaps in the future, as was once done in Peru about 27 years ago--you could be forced to relinquish your dollars in favor of this new currency and at the exchange rate deemed by the Ecuadorian Government--they seem to be getting more and more power now.......I saw what happened to the banks some 12-13 years ago here, it was a true disaster--and having your money not only lose about 70% of its value in about 3 week's time, the banks holding it, all closed up and left the country!

I suggest you take a look at this general Gary Scott article, and there is a VERY good link to the original article in HOY, the Ecuadorian Newpaper, and a link at the bottom to 5 more articles, all can be 'translated' through your google translator as they are in spanish, but informative.

http://www.garyascott.com/2011/06/03/14378.html?utm_source=Gary+A.+Scott+Newsletter&utm_medium=email&utm_campaign=029c5dfc43-RSS_DAILY_EMAIL_CAMPAIGN

Some people are sayng that the law states that the only legal currency that can be used here is the U.S. Dollar, but others are finding loop-holes in this law and if they want to implement it, they will find a way. I truly see this as the beginning of a monetary change...It will happen little by little.

William Russell

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William Russell

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Ecuador to Replace U.S. Dollar?

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