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There’s a reason El Salvador uses the dollar, and why Ecuador and Venezuela do, and why Argentina, where I lived for six years, had de facto dollarization throughout the 1990s. In all these cases, reverting to the world’s reserve currency as the national medium of exchange is a last resort move, a mark of profound institutional failure brought on by hyperinflation and a history of exchange rate instability. It’s an acknowledgement that the people of the country in question cannot trust the stewardship of their money with their leaders, whatever their political persuasion, and the bankers who work with them.
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