However, the story behind El Salvador`s dollarization is a little different. El Salvador originally used the “colonist” as its national currency. From 1993 to 2000, the colon was traded at $8.75 for $1. However, on January 1, 2001, the government of Francisco Flores officially decided to make the USD legal. The reasons given at the time for this transition were: The forced course was criticized by Professor Larry Parks, among others: “If the money is good and people voluntarily accept it, what is the need for mandatory course laws? If money is not good, how can you force people to use it in a democracy? [1] The Denationalization of Money – Friederich A. Hayek Ignacio Lagos, 860840 Summary As the title of the article suggests, Hayek proposes the denationalization of money. That is, to free money, like any other commodity in the market, from free competition between private money providers who will strive to provide high-quality money to satisfy the needs of the public and not be excluded from the market. So, in the end, they would replace the low-quality parts with better ones. Hayek admits that his position is radical and may even seem far-fetched, but it is because throughout history, leaders have made us believe that the issuance of money is an attribute that belongs exclusively to them, and they have insisted so much on this point, by their own conviction that it seems to us today an indisputable fact. But for the author of this text, if people could notice the price they pay for periodic inflation and instability because they have to use only one type of currency, and could consider the advantages of being able to choose between several currencies, they would certainly find the price exaggerated. Roman The thesis of the text itself is really new. The vast majority of countries with constitutions emphasize the exclusive power of rulers to mint money and determine value relative to others. I am impressed by his concept of issuing money in favor of the rulers of the modern state, because Hayek at this point does not claim that they spend money to keep it in their pockets, but alludes to the issuance of money as a method to satisfy the urgent demands of the population and thus monopolize the votes.
but without taking into account the fact that this monetary issue will harm the currency and the economy in general in the long run. It is interesting, as the author points out, that leaders are in a difficult position, either spending money at the expense of the long-term economic future or losing the support of the population. I think this is observed in Argentine history, where the most popular leaders were those who made large budgetary expenditures supported by inflationary taxes. But if this is the criticism, then the criticism is directed not only against the rulers, but also against the people who demand higher public spending and ignore the economic consequences they would attract. I think Hayek`s analysis forgets that the existence of independent central banks theoretically limits the government of the day to issuing money for political purposes. The fact that corruption and clientelism in some states lead to the theory not being put into practice does not necessarily mean that the theory fails. I think Hayek is giving the impetus to rethink the current system of issuing money, but this is undoubtedly an issue that needs to be discussed with great sensitivity, because we are not talking about anything more and nothing less than seeing in our hands who has the power to print banknotes.
