A DOLLARIZED SCHEME FOR HONDURAS

Abstract

Only the economy can strengthen the currency, the unofficial but tolerated dollarization shows the distrust in the exchange and monetary policy that is executed in a country. Uncertainty about the devaluation creates distrust in the national currency. Entrepreneurs, merchants and other economic sectors begin to quote and set prices of goods and services in dollars. Mistrust causes the replacement of the domestic currency with a foreign currency. In the case of Honduras for the US dollar, in which different financial transactions that people make to obtain financial products, goods or services are made in dollars. When the issue of dollarization is subject to debate, it is always addressed only and exclusively from a financial and monetary point of view, the structural vision that makes the loss of value of the national currency as an effect of the weak economy is avoided. To the extent that the problems that generate a weak economic structure are also solved, the domestic currency can be strengthened, and at the same time it will allow a more objective understanding of the relationship between production and monetary function.