AmbergrisCaye.com Home Forums Talk Belize Travel Credit Card Surcharges

B A M !!! Take that, Susan !

I see no economic reason Belize can't accept the US dollar as its currency. El Salvador (pop. 6 million) dollarized during 2000-2001 and it worked. Apart from the expected confusion (mainly amongst poor people who couldn't read or write) during the transition period - Colones were phased out gradually - the country and its people benefited enormously from the change. Dollarization helped El Salvador recover quickly from the devastating earthquakes of January and February 2001.....there was no "local" currency to collapse.

Equador actually dollarized before El Salvador: http://ask.elibrary.com/login.asp?c=&host=ask%2Eelibrary%2Ecom&script=%2Fgetdoc%2Easp&query=pubname%3DThe%5FEconomist%26puburl%3D0%26querydocid%3D50073417%40urn%3Abigchalk%3AUS%3BL ib%26dtype%3D0%7E0%26dinst%3D0%26author%3D%26title%3DThe%2BAmericas%253A%2BMixed%2Bblessings%253B%2BEcuador%2527s%2Beconomy%2B%2B%26date%3D01%252D26%252D2002%26query%3DEcuador%2Bec onomy%26refid%3Dabacci%26maxdoc%3D10%26idx%3D0&title=The+Americas%3A+Mixed+blessings%3B+Ecuador%27s+economy++&pubname=The%5FEconomist&author=&date=01%2D26%2D2002&ctrlInfo=&refid=ab acci ..overall, a good thing it would seem.

Belize CAN easily afford to dollarize..if El Salvdor and Equador could do it - both of which had weaker economies per capita than Belize - then it would not be a great problem for Belize. The only thing stopping it is the fact that a few very wealthy people (politicians included) benefit from the artificially imposed black market exchange rates. They make fortunes from Belizean businesses and people desperate to change their Belize dollars to US dollars so they can pay for imported goods.

Firstly -great to see Susan back-do not stay away for so long again.
I would believe that the U.S.would give Belize up to 50 million dollars to dollarize as a one time payment-they certainly gave ElSalvador far more.
Why you ask? The answer is very simple the poor people keep their money under the bed and huge amounts just stay in the country never to be repatriated which allows the U.S. govt to keep an artifically high dollar rate on the world economy-if you look at Russia/Former Soviet Republics/China -countries which have a non-tradeable currency the only monies everyone wants is U.S. dollars.It is estimated there are trillions of dollars that will bnever get back to the treasury which is why the dollar was taken off the gold standard in the sixties.The U.S. have no idea even approx. how many dollars there are in worldwide circulation and obviously do not care(neither would I if I could print and spend what I wanted to).
The world bank is staffed by basic do-gooders on huge salaries that are vastly overpaid who speak diplomatic language/study graphs and are told by th U.N./Nato/and most of all the U.S. gov't who to give money to no matter what they privately think-example Belize is trying to sell the DFC without releasing the debts/profits(sic) spread sheets-the World Bank restructured the loans only a couple of years ago.

Chris, you and I are in agreement that changing would be good for Belize. Where I seem to differ from some of the rest of you is how easy that would be for Belize to do. I offer this web page as to the laws that El Salvador enacted with the change http://www.bcr.gob.sv/ingles/integracion/ley.html

the parts about requiring reserves and changing the local currency into dollars is especially relevent and is some of what I think would be difficult for Belize. It is not and cannot be done now, that is get US dollars for Belize dollars from the bank. The question I have is how will Belize get the US$ to do this? If they cannot get enough now, how will they get it when they change? I have yet to get a plausable answer to that question.

Also some factors that differ on El Salvador and Belize; El Salvador GNP 11BillionUS Belize less than 1BillionUS and El Salvador took a 50% devaluation in currency prior to dollarization.
Ecuador GNP 18BillionUS and also devalued it's currency losing 80% of it's value.
My point being, both those countries had a lot larger economy to work with and both devalued which Belize has yet to do unless you consider the 2.15 to 1 Casa de Cambio exchange rate which is only a fraction of what a true rate would be.

Bywarren, from your link: "The Law permanently fixes the exchange rate between the Colon and the US Dollar at 8.75 Colones per US Dollar, the same exchange rate that has been inplace for over 7 years."....where exactly was the 80% devaluation you spoke about? I was in El Salvador just after the February 2001 earthquake (we felt lots of aftershocks) and everyone was pleased with dollarization and the way it went. Why can't Belize follow suit?

It is easy to look for obstacles rather than solutions. It might be a BIT of bother for Belize to dollarize but the benefits would be felt very quickly by the vast majority of Belizeans.

When I think of those who would lose money because of dollarization I laugh so hard my fillings ache: The Central Bank of Belize and Black market money changers.

The El Salvador colon was 2.50 to 1 until 1986 when it was devalued to 5 to 1 and at the change to dollarization it was 8.75 to 1.

If the same holds true for Belize as for other countries that went to the dollar, and from all the accounts of what the Belize dollar is actually worth, it will be the people of Belize that have all of their savings in Belize dollars that will be hurt.

Once again Chris, we are in agreement that dollariztion could be good for Belize. I just think it important for all to realize the sacrafices that will have to be made. It is not a simple solution without consequences.

Man ,I only wanted to go fishing and have a Belikin!

Pedro,

In my opinion, Your understanding of the US economy is right on. I have only run across a handful of people that understand this. Too bad, because this is scary stuff that far more people should understand. Especially if they have any intentions of holding on to their wealth. The US's worst nightmare is that Euro takes the place of the dollar as the preferred currency of the world and that all those dollars come flying home...

Buy gold now

never happen - W and Tony will step in first