The Venezuelan economy is once again at the center of international debate after US economist Steve Hanke confirmed the formal submission of a proposal to fully dollarize the country. The plan, developed in conjunction with opposition lawmaker Antonio Ecarri, was requested directly by the White House and proposes replacing the bolÃvar as legal tender. The initiative has reignited a debate between the government of Nicolás Maduro, the opposition, and economic experts, while the population continues to suffer the effects of rampant inflation that remains unchecked.
The announcement, made at the end of August, provoked an immediate political reaction. Jorge RodrÃguez, president of the National Assembly, dismissed Ecarri from his position as head of the Parliamentary Friendship Group with the United States and called the proposal "irresponsible" and contrary to the Constitution, which establishes the bolÃvar as the sole currency. However, Hanke insists that the measure is viable and has public support, although the path to formal dollarization remains fraught with legal, political, and economic obstacles.
Hanke's plan and the government's response
Steve Hanke, a professor at Johns Hopkins University and known for his monetary reforms in other countries, has explained that his proposal is part of the "Grand Dollar Strategy" promoted by the Trump administration. According to the economist, Venezuela and Argentina are the leading candidates in the region to adopt the dollar as their official currency , a measure that, in his opinion, would end hyperinflation and restore stability to the country. Hanke asserts that the Central Bank of Venezuela has sufficient reserves to carry out the conversion and that workers would see an immediate increase in their purchasing power.
The Chavista response was swift. Jorge RodrÃguez, in a public address, denounced the initiative as "false, absurd, and outlandish" and announced an investigation against Ecarri. The government maintains that the bolÃvar must remain the national currency and that formal dollarization would be a surrender of economic sovereignty. However, the reality is that the dollar already circulates widely in Venezuela , where prices for real estate, vehicles, and basic goods are set in foreign currency while public sector salaries are paid in devalued bolÃvares.
Arguments for and against dollarization
Venezuelan economist Asdrúbal Oliveros has pointed out that the main argument in favor of dollarization is that Venezuela has been unable to stabilize its inflation for over four decades , and adopting a foreign currency would act as a "straitjacket," forcing a rapid drop in prices. Furthermore, by eliminating monetary issuance, the state would be unable to finance its deficit by printing money, thus imposing strict fiscal discipline. Oliveros, however, warns of the costs: the loss of monetary policy control, dependence on the decisions of the Federal Reserve, and the negative impact on the already weakened manufacturing sector.
On the other hand, the former president of the Central Bank of Venezuela, Miguel RodrÃguez, is one of the proposal's harshest critics. In a recent interview, he asserted that dollarization "condemns the country to stagnation, unemployment, and hunger ," citing Ecuador as an example, where the economy has not grown in the last decade. RodrÃguez argues that the solution lies in addressing the fiscal deficit and strengthening the bolÃvar, not eliminating it. He also questions Hanke's credibility, considering him an economist without international recognition.
The current situation: a de facto dollarization
While the political debate intensifies, the reality is that Venezuela has been experiencing partial dollarization for years . The bolÃvar has lost almost all its value, and the dollar has become the de facto currency for most commercial transactions. According to data from the Central Bank, monthly inflation accelerated to 19,9% ​​in July, the highest in six months, demonstrating that the underlying problem remains unresolved. International reserves, which hover around $14.000 billion, are considered insufficient to support full dollarization.
Oliveros, for his part, advocates for a "third way" he calls "monetary freedom ," in which the state maintains the bolÃvar but citizens can freely operate in the currency of their choice. This option, he says, is less rigid than full dollarization and would allow the bolÃvar to gradually regain confidence. However, Oliveros himself acknowledges that the informal bimonetary system is likely to deepen in the short term, with more cash remittances and correspondent banking relationships with the United States.
Hanke's proposal, which estimates a 50% to 80% probability of official dollarization, has sparked intense debate about the country's economic future. Meanwhile, Venezuelans continue to grapple with a currency that devalues ​​daily and an economy that has yet to fully recover. The discussion about whether adopting the dollar as the official currency is the solution or a historic mistake seems far from over, but what is clear is that economic stability and the country's reconstruction require difficult decisions and a political consensus that is currently lacking.