According to Oliveros, dollarizing the Venezuelan economy has key advantages and disadvantages.
There are those who warn that dollarization in Venezuela would not resolve the underlying distortions.
The discussion over the formal adoption of the US dollar as legal tender in Venezuela has returned to the fore. According to economist Asdrúbal Oliveros, the official dollarization of the Venezuelan economy is a latent possibility that should not be ruled out, based on the critical need to stop decades of monetary instability and loss of purchasing power.
For Oliveros, the proposal to formally dollarize the country arises after more than 40 years of high inflation and the inability of the authorities to sustain the value of the bolivar. Oliveros argues that the great advantage of this foreign currency (in its banking and electronic form) is its ability to reduce and stabilize prices quickly, a sensitive issue for national dynamics.
“Although I think that it is not a decision that is going to be made at this time, it is something that cannot be ruled out for the future,” stated. In his opinion, it is likely that in the coming months further indications emerge that point to a decision on this issue.
However, Oliveros warned that it is a measure that is difficult to reverse and reduces the competitiveness of the manufacturing and industrial sectors in the medium term.
Weighing the two things is important, it is likely that for most Venezuelans it is more important to be able to recover purchasing power, to have certainty about inflation, rather than competitiveness. Therefore, this debate is not closed and it is likely that in the coming months we will see more news, more signals that point to a discussion and a decision on this issue. You have to be attentive.
Asdrúbal Oliveros, economist.
Despite Oliveros’ analysis, other specialists consider that the measure would be insufficient without fundamental changes. Analyst Daniel Arráez told CriptoNoticias at the beginning of March that, as long as there is no “reinstitutionalization of the country and true independence of powers,” any economic measure will be just a “bad of cold water.”
Arráez argues that official dollarization would not resolve structural distortions, such as high prices by regional standards and systemic distrust. In addition, he warns that under the current scheme, the flow of capital would continue to be restricted. “The dollars will continue to go through a central bank that will allocate the amount of dollars that will be on the street,” he argued.
While the political discussion focuses on the US currency, the local market has already adopted the dollar de facto. Since 2018, the Venezuelan economy (although on the consumer side) It is already handled in that foreign currency. In addition, many of the prices of goods and services in that country are charged with the greenback as a reference.
In that interim, use of the USD Tether (USDT) stablecoin, which is pegged to the dollar, has also increased exponentially in Venezuela. This has been to facilitate cross-border operations, local trade and safe haven of value.