In Argentina, Javier Milei, an independent candidate, proposes dollarization. It is expected that he will qualify for the second round in the next elections and thus replace the ruling party. The BRICS – Brazil, Russia, India, China and South Africa – are seeking a common currency other than the dollar. Brazil and Argentina talk about the southern currency. Andrés Arauz proposes that Ecuador modify the dollarization so that the dollar remains in the exclusive use of the state, while the citizens are deprived of their dollars and instead given a virtual unit of account, which cannot be converted into any currency. Some want the dollar, others to escape from it.

Having a common currency is not possible between countries with different fiscal policies and without true integration. It took years for the European Union to accept the euro, and problems remain. BRICS is far from integration.

Instead of de-dollarization, BRICS wants to create an alternative financial center: New York, London and Tokyo work in tandem and only securities stored in these centers are traded globally.

A country cannot rely on its reserve currency and compete with the dollar if it does not have a large and open economy. China is large and open to trade in goods, but it does not allow the free flow of capital and currency fluctuations, which are essential to gain the trust of world capital. One of the reasons that neither the Brazilian real nor the Mexican peso count in the rest of South America (except for the real in Argentina) is that Mexico and Brazil are protectionist countries. Both are closed to Ecuador’s star products.

BRICS has a two-fold motivation:

– When a country flagrantly violates the international order, Washington reserves the right to freeze that country’s funds on the American financial market. He did this with Iran and Russia, who lost access to their international reserves. Some of these countries want to protect themselves from such a possibility.

– USA sanctions money laundering. Ecuadorian politicians who accepted dollar bribes must resign their assets today (there, here? Okay, thanks). Corrupt politicians around the world are looking for a new financial center to protect illegally acquired money.

Argentinians, for their part, are burdened with inflation exceeding 100% and an exchange market so segmented that the government has just created a “Malbec dollar” for wine exports. The value of the dollar depends on the type of transaction. Argentinians yearn for the freedom to earn their salaries and pensions in a hard currency that works anywhere in the world, as is the case in Ecuador. Although we run the risk of this freedom being abolished.

In Ecuador, dollarization stopped inflation and brought us stability. Unfortunately, his legal scaffolding was not fully assembled. The central bank was to become the Banco de la Nación, where public sector entities have accounts, but which is prohibited from making loans or investing in government securities. Because this was not done, we remained vulnerable to governments that did not follow the rules of the dollarized economy, seeking to finance themselves with Ecuadorian dollars.

If the Argentinians dollarize, let them do it completely. (OR)