El Salvador adopts US dollar as its currency

 

Mexico City - The decisive US influence over Latin America's fragile economies was highlighted in El Salvador this week when the tiny Central American nation adopted the US dollar as its national currency, following the example of Panama, Argentina and Ecuador, reports Michael McCaughan.

"Monetary integration is our bullet-proofing mechanism for joining the globalised market," said Mr Rafael Barraza, director of El Salvador's central bank. The change of currency is expected to reactivate the economy and attract foreign investment.

An estimated 1.5 million people have emigrated from El Salvador to the US, sending back $1.5 billion in remittances last year, a key factor in facilitating the dollarisation process.

The initiative was approved by El Salvador's parliament but opposed by the majority FMLN party, made up of former guerrillas, who said the switch compromised national sovereignty.