Ecuador
It adopted the dollar in 2000, under the presidency of Jamil Mahuad, after a banking and inflation crisis. Dollarization anchored expectations and reduced inflation, but as is usual in these cases, it eliminated monetary and exchange rate policy.
Recent reports from the International Monetary Fund (IMF) emphasize that macro stability in Ecuador today depends less on the nominal anchor and more on fiscal discipline, reserves in highly liquid assets and financial regulation.
The IMF itself warns that, without a full lender of last resort, external shocks are transmitted more quickly to the financial system. When a country is dollarized it does not have a central bank that can “create money” in an emergency. That means that, if an external shock occurs—for example, a financial crisis, a drop in trade, or an abrupt outflow of capital—there is no one to come out quickly to rescue the banks or inject liquidity.
With a weaker dollar against currencies of non-dollarized trading partners, the main risk is imported inflation and loss of real competitiveness in exposed sectors. In a world with more sanctions and payment frictions, dollarization limits buffers against trade shocks.
El Salvador
Since 2001, the country adopted the dollar to reduce financial costs and integrate the economy into international flows.
What do the organisms say? The IMF has indicated in recent evaluations that the scheme requires strengthening public finances and liquidity management, given that dollarization reduces tools to respond to episodes of external stress.
Heading into 2026, the economy remains particularly exposed to changes in global financial conditions and trade shocks. In a more tense geopolitical context, the absence of exchange rate policy amplifies the impact of sanctions, tariffs or logistical disruptions.
Panama
It is the oldest and most “pure” case in the region, with a historical dollarization associated with its logistical and financial role.
Analysis by the Bank for International Settlements (BIS) and the IMF highlight that Panama’s strength comes from its financial depth and its logistics hub, but also that exposure to global cycles is high.
This year, with greater trade fragmentation and geopolitical tensions, Panama faces risks from global trade volatility, financial compliance and abrupt capital movements, with limited room for macro adjustments.
Venezuela (de facto dollarization under stress)
Venezuela did not officially adopt the dollar, but its de facto dollarization accelerated between 2018 and 2019 in response to hyperinflation and the collapse of the bolivar. The government itself relaxed controls, stopped monetary issuance and decriminalized the use of the dollar, which came to dominate prices, salaries and daily transactions.
After closing the last hyperinflationary episode in 2021—after annual inflation that reached 130,000% in 2018—the risks have intensified again.
The IMF projects a price increase of 548% in 2025 and 629% in 2026, while independent economists estimate even higher figures, above 800%, which brings the country closer to a hyperinflationary scenario again.
In the absence of recent official data from the central bank, analyzes agree that Venezuela today faces inflation in dollars, estimated at around 80% annually, a rare phenomenon that reflects the total unanchorment of expectations.
The dollar channel – sanctions
De facto dollarization depends critically on the flow of foreign currency, a flow from which Venezuela currently suffers. This channel was weakened after the restrictions imposed on the operations of Chevron, one of the main suppliers of dollars to the system, and due to the State’s need to sell crude oil with strong discounts (up to 50%).
With fewer dollars circulating, the exchange gap between the official exchange rate and the parallel exchange rate has exceeded 60% and the price of the dollar has skyrocketed nearly 400% in the last year, directly putting pressure on prices.
In the context of United States intervention, the intensive use of financial sanctions and greater geopolitical frictions, Venezuela illustrates the extreme risk of dollarization without institutional support: without monetary policy, without statistical credibility and with access to foreign currency conditioned by geopolitics, the dollar ceases to be an anchor and becomes an amplifier of inflation and inequality.
For the rest of Latin America, the case serves as a warning: in a more hostile world, dollarization—especially de facto—can expose the economy to immediate external shocks that are difficult to contain.
Cuba
For decades, the Cuban government maintained a love-hate relationship with the dollar but ended up extending its program of partial dollarization of the economy to alleviate the lack of foreign currency.
Havana recently authorized greater circulation of the dollar in the private sector, until now limited to state commercial establishments and the sale of fuel.
Argentina, problematic partial dollarization
Argentina maintains the peso as its official currency, but the dollar functions as a reserve of value, price reference, and informal unit of account. Savings, real estate, contracts and expectations are dollarized, although the financial system and monetary policy remain in pesos.
The IMF has repeatedly pointed out that this partial dollarization weakens monetary policy: although the central bank can issue pesos, it fails to anchor expectations, because households and companies make decisions in dollars. This generates high inflation, indexation and a rapid transmission of external shocks to the exchange rate and prices.
Unlike Ecuador or Panama, Argentina does have a central bank and a lender of last resort, which gives it room to maneuver in financial crises. But, unlike them, it lacks monetary credibility, so every external shock (dollar, Fed rates, trade, geopolitics) translates into exchange rate pressure and higher inflation.
The common denominator in 2026
According to ECLAC, low regional growth and greater external vulnerability coincide with a more fragmented world. For dollarized economies, the dollar remains an anchor, but it is no longer a complete shield.
With a weaker dollar, more financial sanctions, and greater trade uncertainty, dollarization reduces degrees of freedom just as external shocks become more frequent and asymmetric.
Gabriela Siller, director of economic analysis at Banco Base, points out that although the dollar has lost ground due to the liquidity injected by the Federal Reserve, an increase in global risk aversion could quickly reverse that trend. In a context marked by geopolitical tensions, sanctions and unpredictable political decisions from Washington, this volatility of the dollar becomes an additional risk for dollarized economies, whose stability depends on external factors over which they have no control.
