The continued instability of the bolivar has brought the possibility of official dollarization in Venezuela back to the center of discussion.
The country will be shut down in February 2026 Annual inflation rate is 665%According to estimates by Steve Hanke, an economics professor at Johns Hopkins University (one of the most prestigious academic institutions in the United States),
These are independent measurements due to the lack of official data from the Central Bank of Venezuela (BCV).
The crisis, which the International Monetary Fund (IMF) described as “protracted,” has caused the value of the country’s currency to plummet by more than 87% in a year. Given this situation, authorities have room for maneuver. almost ceased to existExperts, on the other hand, evaluate radical solutions.
In this scenario, some economists who spoke to CriptoNoticias said: official dollarization as a possible escape method. It is a logical step to stabilize prices and attract investment. However, other analysts believe the move would mean giving up monetary sovereignty and increasing vulnerability to external shocks.
At the heart of the debate is whether dollarization can restore trust in the system and stimulate growth.
Regarding this, Venezuelan economist Daniel Arraez says:
Without re-institutionalization of the country and true independence of the great powers, any economic measures will be put in the cold. Venezuela’s official dollarization leaves some countries still under sanctions. There will be new rules of the game, but dollars will still continue to circulate through central banks, which decide how many dollars circulate in the market or into the economy.
Daniel Arraez.
Arraez argues that Officialization of the dollar in Venezuela will not resolve fundamental distortionsThis is because domestic prices will continue to rise, even by local standards, and there is systemic mistrust.
He added that without economic freedom and legal security, inflows of foreign capital will continue to be difficult. This gives digital assets such as Bitcoin (BTC) a leading role as a censorship-resistant tool, and Tether’s USDT stablecoin facilitates cross-border operations.
Digital asset sector specialist Franklin Roldan takes the opposite position. Official dollarization will only recognize reality. Something that has been happening for quite some time.
This refers to de facto dollarization I have been in this country for several years.
I believe that formally establishing a currency that will be used to calculate prices in all sectors of the economy will also help establish salaries, thereby providing Venezuelans with greater economic stability. It is urgently needed.
Is it possible or achievable? I really don’t understand. However, I believe that the search for alternatives that can restore purchasing power to workers, even if only incrementally, is a necessary discussion that must be taken seriously.Franklin Roldan.
Dollarization poses risks to sovereignty
Debates on this topic are also taking place at an academic level, trying to balance the benefits and risks of exchange rate ‘constraints’.
In this regard, Ronald Balza, dean of the Catholic University of Andrés Bello, recalls that the Venezuelan state has historically been prone to opaque debt. Therefore, he thinks Dollarization by itself does not guarantee fiscal discipline.
Hyperinflation was prevented without dollarization. When I talk about de facto dollarization, I always emphasize the fact that dollars began to be used in the economy. Bolivar has not been ruled out. That is, we have moved to an explicit multi-currency system (…) I do not believe that dollarization is creating this stability. Rather, it is the possibility of more spending, and we believe that this spending comes from savings and investments from other parts that do not require other currencies, for example.
Ronald Barza.
Warns about replacing national currency May create greater external dependence and loss of economic means. He emphasizes that “stability also depends on how taxes and state revenues are managed.”
Meanwhile, Tamara Herrera, president and chief economist at consulting firm Synthesis Financiera, warns that dollarizing the country is not a magic solution.
Experts assert that the country could fall into “limited stabilization” with limited growth and no ability to respond to declining incomes or external fluctuations.
This is what will happen if transparent fiscal rules and institutional accountability are not applied. In addition to previous reforms, it included a stabilization fund to absorb external shocks, especially in the fragile oil economy.
For Herrera, dollarization imposes rigor, but its success It depends on whether Venezuela first builds the institutional foundations and governance. Something that has been missing for decades.
The danger in defending dollarization is that it has many virtues. Because dollarization forces action, and the reality is that what you’re dragging around for decades is a distrust of policy management, and that distrust of policy management leads over and over again to the fact that no one wants their own currency. (…)
Tamara Herrera.
Therefore, consider that the important thing is to “end the underlying disease.” Lack of interest in bolivar. “That would create a strong exit path, but we need a stabilization fund, we need clear rules and we need transparency,” he said.
Regional experience in dollarization
Assessing Venezuela’s dollarization potential includes considering steps taken by other Latin American countries whose official currency is the dollar. The analysis shows mixed results.
For example, a report on Ecuador’s dollarization adopted in 2000 showed that inflation had fallen to an average of 4% per year. Poverty and unemployment also decreased, credit expanded, and exports diversified. Inequality has widened and responses to crises like 2008 have been limited.
El Salvador has been dollarized since 2001, and prices have remained stable thanks to low inflation. By eliminating exchange rate risks in trade and remittances and lowering interest rates, the private and public sectors could save up to 0.5 percentage points of GDP annually. However, the process Flexibility in the face of external shocks was limited and seigniorage losses occurred. Highlighted by experts from the World Bank and IMF.
Considering these experiences, Alejandro Grisanti, director of EcoAnalytica, warns that following in the footsteps of Ecuador and El Salvador, Venezuela will remain vulnerable to external shocks such as fluctuations in oil prices.
So he argues that by an independent central banksimilar to Peru and Colombia, to protect the national currency rather than abandon it.
I want to stay in Bolivar. I prefer a return to a bolivar with purchasing power, an independent central bank that protects the bolivar’s purchasing power. (…) Because the economic cycles of a country like Venezuela and a country like the United States can be very different. And we need a currency to deal with these economic cycles and maintain the purchasing power of our people.
Alejandro Grisanti.
Grisanti recognizes the immediate benefits of dollarization, including rapidly reducing inflation and eliminating daily exchange rate uncertainty.
But he warns that This is an irreversible step that eliminates a major economic policy tool (Adjustment of interest rates or exchange rates to increase competitiveness). something that could exacerbate rigidities in the event of a decline in oil revenues or a change in US Federal Reserve policy.
Looking ahead to 2026, with political transition underway and foreign exchange inflows increasing, Mr. Grisanti is prioritizing: Abolish exchange controls and unify exchange ratesas the previous most viable step to reduce distortion, breakage, and replacement gaps. He said this would not resolve fundamental structural problems, such as a lack of institutional trust and the need to diversify the economy, before considering full dollarization.
Bitcoin and USDT: a digital haven
As reported by CriptoNoticias, in view of the collapse of the bolivar, the usage of stablecoins such as Bitcoin and USDT has increased significantly. These assets facilitate remittances under sanctions (approximately 9% of the total in 2023) and international payments. This leverage has placed Venezuela among the top 20 countries in the world for digital asset adoption.
But technology lawyer Raymond Orta warns that this “exit” lacks a safety net.
While the traceability of digital asset networks makes criminal activity difficult, “if a stablecoin issuer goes bankrupt, Venezuelan users could wake up with their savings blocked,” increasing the risk of volatility, connectivity issues, and possible abuse.
It warns that official dollarization could shrink or replace the P2P currency market (the dollar and USDT), which supports thousands of people through arbitrage and informal transactions.
So Orta suggests this. Venezuela should look to Models like the Bermuda model, Where digital assets are operated under strict supervision Regulatory.
Stablecoins like Circle’s USDC already have oversight in the United States. And given that it is an asset that simulates the dollar and has adjustable support, it is entirely viable for Bermuda to do something like what it did with Venezuela. In that sense, I think it’s something I can totally recommend, especially at this point in time when the door is open to accomplishing that.
Raymond Orta.
In general, the consensus among experts is: Without fundamental institutional reform, any monetary change will not be sustainable.. There is also no transparency that would allow investment to resume in the oil sector.
And within this panorama of legal mistrust, digital assets are expected to be strengthened as a pillar of operations. Therefore, Bitcoin and USDT will continue to play a leading role as censorship-resistant systems.
“And as long as barriers to traditional free markets remain, the crypto economy seems destined to take root as a haven for Venezuelans. All this in a society that, as Araez pointed out, is unlikely to return to using cash or the traditional banking system exclusively.
