US Dollar Users As A Legitimate Payment Tool
There are some countries in the world who prefer to use the US currency rather than their own currency. This phenomenon is known as dollarization. Dollarization takes place in an unstable country that has high inflation rates and a weakening of currencies in these countries so that the US dollar is adopted as a substitute. By accepting US dollars for transactions and holding them as an inflation hedge against their own currency, it entices other countries to participate as local currency substitutions.
Dollars can be used to buy goods and services, but the US currency does not replace domestic means of exchange. Full polarization occurs when the nation no longer issues its own currency and treats the dollar as a legitimate payment instrument. However, if the host country’s economy continues to decline after conversion, the country may incur significant debt in foreign central banks. Here’s a user country US dollars as a valid payment tool:
The use of the US dollar in Panama has occurred since 1903, when the nation declared independence from Colombia. The dollar is a natural choice for this country, because the US company is designing and building a 50-mile Panama Canal. Dollars are accepted in Panama at nominal or exchange rate 1-1. Two currencies became official and allowed US travelers to get comfortable using dollars, free for goods and services in Panama.
Belize dollars are exchanged for US dollar at 2-1. Visitors who carry dollars do not have to swap their currency. Prices are listed in Belize dollars, and most are happy to accept US dollars as payouts, but conversions are actually applied to local currencies. Tourists are advised to have a strong understanding of exchange rates, since Belize dollar uses identical symbols with US dollars. Tourists can only carry a maximum of 5,000 USD, and that amount must be declared at customs.
Americans traveling to Ecuador do not have to worry about the cost of currency conversion and exchange rates. In 1999, shaken by falling oil prices, the Ecuadorian currency, the sucre, lost about 82% of its value. President Jamil Mahuad, in January 2000, declared a state of emergency after the president of the central bank resigned and sucre was officially replaced by the US dollar. By 2015, 85% of the people of Ecuador support the dollarization, but the strength of the US dollar and the fluctuation of crude oil prices as the country’s major exports, added the pressing economy.
In combination with the US dollar, Zimbabwe also uses South African rand, Chinese yuan and euros in its multi-currency system. The country uses many currencies. The faltering economy and extreme hyperinflation caused the African nation to replace its currency to the US dollar since 2009, when prices of goods and services often change from minute to minute. A stronger US dollar against rand in 2015, resulting in a decline in tourism in the country, only a third of the 3 million projected visitors.
Vietnam’s official currency is dong, set in 1978, three years after Saigon fell to North Vietnam and became Ho Chi Minh City. In Vietnam, taxi drivers, hotels and restaurants accept the US dollar, although Vietnam’s central bank has been trying to halt the growing US supply of dollars in developing nations. Merchants who list prices in US dollars or receive payments in U.S. dollars are fined.