Formal dollarization is becoming a central topic in Venezuela's political debate, driven by a long-standing history of inflation and economic instability. Opposition lawmaker Antonio Ecarri is collaborating with US economist Steve Hanke to draft legislation that would formally adopt the US dollar as Venezuela's national currency. This move is seen by proponents as a way to stabilize the economy after years of turmoil.
Despite the growing discussion, experts from the Institute of International Finance (IIF) like Jonathan Fortun indicate that Venezuela currently lacks the necessary fiscal, financial, and external conditions for a formal dollarization. While the dollar already plays a significant role in the economy, converting this into a full monetary regime requires addressing issues like the future of the bolivar, the treatment of deposits and contracts, and the functioning of a banking system without a local lender of last resort. Fortun also warns that without fiscal anchors, dollarization could lead to adjustments through activity and employment.
The Academia Nacional de Ciencias Económicas (ANCE) also highlights the risks associated with replacing the bolivar with the dollar. They acknowledge that full dollarization could curb inflation and offer benefits like reduced exchange rate risk and increased predictability for businesses. However, ANCE cautions that it would mean Venezuela surrendering monetary policy autonomy to the US Federal Reserve, losing the ability to use exchange rates to buffer external shocks, and lacking a lender of last resort for its banking system. They emphasize that dollarization alone would not resolve structural issues like chronic fiscal deficits or public debt, and could lead to economic contraction, wage deflation, or increased unemployment in the face of adverse shocks.
Several local consultancies provide a mixed picture of dollar usage. Ecoanalítica reported that during the peak of hyperinflation, approximately 72% of transactions were in foreign currencies. However, their April 2025 study showed that 84.2% of transactions were in bolivars, with US dollar payments accounting for only 10.2%. Other currencies like the Colombian peso (2%), cryptocurrencies (1.9%), and the euro (1.7%) make up smaller portions. Alejandro Grisanti of Ecoanalítica notes that while the private sector is keen on increased dollarization, the government has been reluctant, even implementing policies like the Impuesto a las Grandes Transacciones Financieras which partially de-dollarized the economy.
Experts suggest that a full dollarization is a remote possibility for 2026. Instead, a multi-currency environment, where the bolivar coexists with other currencies, is more likely. The ANCE proposes exploring a bimonetary or multi-currency regime alongside comprehensive institutional reforms, including fiscal adjustments, strengthening the central bank's autonomy, and a flexible exchange rate policy. This approach would offer both anti-inflationary discipline and economic flexibility, allowing Venezuela to navigate oil price fluctuations and diversify its economy while gradually restoring confidence in its national currency.
