Sucre is Sugar & Can Be Sweet

Dec 21st, 2008 by Gary

Sucre has several meanings in Ecuador…sugar for one. Sucre is the name of a great Ecuador libertarian….and the name of Ecuador’s former currency, the sucre.

Years ago, after a spate of huge inflation, the sucre, in a short time, collapsed from 3,000 sucre per dollar to 25,000 sucre. Ecuador abandoned the sucre and made the US dollar its official currency.

There has been a lot of talk recently about Ecuador returning to the sucre.

I have ignored these rumors though in many ways I have been hoping Ecuador would reinstate its own currency. The sucre, as Ecuador’s currency, could be sweet for many. More on that in a moment.

First it appears that the sucre will not reappear now.

Yesterday’s Bloomberg article entitled Ecuador’s Correa Says He’ll Maintain U.S. Dollar by Stephan Kueffner says:

Ecuador’s President Rafael Correa said he’ll maintain the U.S. dollar as his country’s currency amid an “extremely grave” economic crisis sparked by the collapse of oil.

“It would be stupidity to drop the dollar under these circumstances,” Correa said in his weekly radio-and-television address.

Speculation has mounted that Correa, a critic of so-called dollarization who called the policy a “complete failure” in an April 2007 speech, would look to abandon the policy in coming years after defaulting on the country’s $3.9 billion of foreign bonds this week. Goldman Sachs Group Inc. forecasts Correa may scrap the dollar in as little as three years as the default prompts international banks to pull credit lines to the country, creating a cash crunch that drives up interest rates.

Why would I want Ecuador a return to the sucre? How could it be sweet?

For Ecuadorians this could be a matter of increasing national pride. This could help the people make their government officials be more disciplined. This could help Ecuador be more independent from the US. This would all be good.

Plus who says the US dollar is a good currency? Not me.

On the downside…for expats, a new Ecuadorian currency could rise pushing up the cost of living for those who receive dollar pensions! This has happened in Brazil..Thiland….even Colombia where the local curencies shot up in value versus the greenback.

If the sucre returned and the governent got their plans wrong, the sucre might fall versus the US dollar.

For expats who hold the dollar and other currencies, this would make living there less expensive. Surprisingly Ecuador’s poor might be better off as well. Western goods like computers and TVs etc. might cost more but the poor do not have these things anyway. Costs of basics…food, shelter could fall.

Having the dollar is convenient. There is no fuss with converting currencies. Otherwise Ecuador’s currency does not matter much, as long as you do not keep your money in Ecuador.

Merri and I do not have a bank account in Ecuador. This has nothing to do with residency or bank safety. Our basic asset protection banking philosophy, which I originally published in the 1970s in my first book “Passport to International Profit,” is even more valid today than it was over 30 years ago. This is:

Live in one country
Bank in a second country
Invest in many countries
Earn in two or more countries
Use a company incorporated in a fifth country
Take a second residence

Since Merri and I live the most in Ecuador and the US, we do most of our banking elsewhere.

We use our ATM card to live on when in Ecuador. Our bank in Cotacachi is here.