I insist, in Bolivia it is necessary to debate dollarization

By: Hugo Marcelo Balderrama - 28/07/2025

Guest columnist.
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Once again, as in the 1980s, Bolivia is experiencing a profound economic crisis. The constant decline in the value of the Bolivian peso is one of the central elements of the economic turmoil we citizens are experiencing.

I humbly acknowledge that the country's problems are greater than the economic crises, as we are a nation gripped by transnational crime. However, stabilizing the economy is one of the major tasks facing the next government, which, as things stand, will be led by a party other than the Movement Toward Socialism. Therefore, one of the issues to be addressed will be monetary reform. In that sense, I believe that bringing dollarization into the political debate is more than necessary, given that the Bolivian peso, as a currency and store of value, is in zombie mode.

Let's start from the beginning: dollarization is a process of monetary cancellation or substitution, where an economy replaces its original currency with the US dollar so that it can serve as a store of value, unit of account, and medium of exchange; thus, removing national currency from circulation.

At this point, many people ask the following question: Why dollarize and not simply revalue the national currency?

The answer lies with one of Bolivia's leading experts on the subject, Mauricio Ríos García:

To begin with, revaluing the boliviano means obtaining the largest possible amount of dollars by borrowing, entrusting it back to the Central Bank of Bolivia (BCB), using it as a backstop to strengthen the boliviano again, and "returning deposits to the people." This, even if it were desirable—which it isn't—implies an amount of time that the country neither has nor can afford to wait; and certainly, in reality, there are no deposits to return because they have already been lost. Therefore, nothing is being returned to them, but rather the public is being given resources from a new debt that will eventually have to be repaid through taxes and inflation. Dollarization, on the other hand, can be immediate, implemented today or on the first day of a new government, and it translates into something as simple as the government recognizing the dollars in the hands of the people as the official currency of the country.

Therefore, the offers to obtain dollars through agreements with international organizations proposed by some of the candidates amount to nothing more than a socialization of losses, since it shifts the financial system's crisis onto the entire population. In simple terms, they're putting us all in debt to help their cronies, the owners of the large financial institutions.

Obviously, there are always those who object to dollarization for at least two reasons: 1) the loss of monetary sovereignty and 2) the competitiveness of the export sector.

The idea that a nation should have its own currency is not an economic argument, but rather a nationalist sentimentality. History shows that national currencies are a relatively modern invention; not a symbol of independence. In fact, until well into the 20th century, the international currency was gold, and national banknotes were valued based on the price of this precious metal. Under this system, countries were no less sovereign. They were simply better protected from their rulers' ambitions to finance their spending through monetary issuance. This restriction did not diminish sovereignty; on the contrary, it ensured that citizens were more prosperous and free.

Today, Ecuador, our neighbor and CAN partner, has been a dollarized nation since 2000. It was that lock that prevented Rafael Correa from advancing his totalitarian agenda and protected Ecuadorians from the clutches of 21st-century socialism. What greater sovereignty could there be than saving and investing freely, without inflation?

On the other hand, manipulating the exchange rate to generate competitiveness ends up impoverishing the entire country, even those who think they benefit, since every devaluation is followed by its evil twin: inflation. True competitiveness is a product of solid democratic institutions, low taxes, legal stability, a security and defense system that protects citizens' freedom, and, especially, a constitutional framework that limits governments.

Finally, with dollarization, the national financial system will have to be held accountable to the public for having been complicit in the Movement Toward Socialism for nearly two decades, and that is my fundamental reason for supporting it.

«The opinions published herein are the sole responsibility of its author».