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Friday, January 29th, 2016  |  USD: Buy 531.29 / Sell 543.92
20 years

Economist calls for Costa Rica to fully dollarize its economy

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June 3rd, 2013 (InsideCostaRica.com) The influx of dollars into the Costa Rican economy has made difficult the Central Bank’s ability to control the exchange rate under the current “band” system.  Now, calls are being made for Costa Rica to dollarize its economy.

 

The economist and president of the Institute for Enterprise Development and Social Action, Luis Loria, proposes that Costa Rica should take advantage of the situation and follow the path of full dollarization.

 

Dollarization refers to a country abandoning its own currency and replacing it fully with the U.S. Dollar, as in Panama.  Loria says that such a move makes sense for Costa Rica.

 

To accomplish this, Loria said that Costa Rica would have two tasks to accomplish: approve the bill known as “Monetary Responsibility, Financial Integration, and Dollarization,” and to replace all of the outstanding colones with dollars using an agreed upon conversion rate (¢ 500 to $1, for example).

 

The economist says that the process could be completed without the need to borrow dollars, thanks to the large amount of reserves held by the Central Bank – some $7.9 billion.

 

Loria said that if dollarization were to occur, people would have better access to loans in dollars, whose interest rates are almost half of those in colones, which would make many projects feasible that today are not, due to the high interest rates on colones.

 

However, The president of the Central Bank, Rodrigo Bolaños proposes a different path: “colonization.”

 

Colonization would reduce the relative importance of the dollar, and Bolaños believes that the high level of dollarization currently in the economy poses risks, such as exchange rate vulnerability which affects those earning money in colones but who have loans in dollars, as well as the cost to the country of maintaining high reserves of dollars.

 

Bolaños believes that a country as small as Costa Rica should not be in a position of not controlling its own monetary policy in order to deal with any shocks in the economy.

 

Researcher Miguel Gutierrez agrees with Bolaños.  “A country without its own currency has no mechanism for dealing with a crisis, it moves with the ups and downs of the dollar and depends on the decisions of others,” he said.

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  • disgusted

    Does Costa Rica have Chinese Xi Jinping permission to do this?? Right, Lady Laura??

  • georgechapogas

    Bolanos is absolutely correct and Costa Rica should consider abandoning the band. this would hurt exports, tourists, expats, and some employment but the colone would retain strength for ticos that work. currently the weakening of the colone by tying it to the dollar has pummeled tico purchasing power as they watch their colone buy less and less. just because the rest of the world is stupidly devaluing their currency does not mean ticos should follow them into a scheme which is destabilizing the world. the people managing the dollar have turned everything gringos buy into a tax as they pay more and more and more for the same items that cost much less when the obama fools entered office. this obama stimulus tax is hurting Americans not just in the USA but world wide and made savings disappear. spending one’s way to prosperity is dumb bunny nonsense. do not talk to me about the phony stock market. it is 20% lower than it was last time the dow hit 15,000 because of devaluation.devaluing sovereign debt and entitlements is the plan, and the people are paying out the butt for it.

    • Marcel M. Pfister

      The band has given Costa Rica a lot of stability in terms of tying the exchange rate into a manageable and reliable bandwidth. For a small country like Costa Rica to have its own currency is a heavy cost but it’s also an expression of fiscal and economic sovereignty. The US dollar is – in fact – already a proxy currency alongside the Colon. Land prices are almost exclusively quoted in US dollars (at least when offered to foreigners). Many restaurants have dual-currency price lists and I am yet to see a Costa Rican business that does not accept US dollars (bills at least).So, factually, the country is to a great degree tied to the US dollar. To actively dollarize the currency is yet another step. In Panama, this has historical connotations. Other countries simply peg their currency against a fixed US dollars exchange rate, something I find rather crude and simplistic. I think a more logical long-term strategy should be to pursue an integrated Latin American market with a single currency (Mexico, Colombia, Peru, Chile and soon to be Costa Rica).

      • Tj Sessions

        Still MOOT! Maybe if Latin American embraces the BRICS and a commodity backed system…..

        • Marcel M. Pfister

          One of the BRICS countries is Latin American (Brazil). Brazil could be the economic locomotive for the continent but my bet is on the Pacific Alliance led by Mexico, Colombia, Peru, Chile and, now, Costa Rica. As for a commodity-based system: This has never worked. It had been tried by Comecon (the communist world’s integrated global market) and was an abject failure.

    • Randy Roden

      It appears as though you STILL need Professional Help!!!

  • Patrick Smyth

    Look to Panama for how successful the dollar has become.

    • georgechapogas

      for everyone but the Panamanians.

  • Tj Sessions

    Moot point folks…….a bit too late……..pick your poison, you still die a debt slave…..Fiat Dollars or Fiat Colones? CR has a Rothschild owned Central Bank, and in a BIG WAY, that could be considered a good thing:

    As of the year 2000, there were seven countries without a Rothschild-owned Central Bank:

    Afghanistan, Iraq, Sudan, Libya, Cuba, North Korea, Iran

    Then along came the convenient terror of 9-11 and soon Iraq and Afghanistan had been added to the list, leaving only five countries without a Central Bank owned by the Rothschild Family:

    Sudan, Libya, Cuba, North Korea, Iran

    The only countries left in 2013 without a Central Bank owned by the Rothschild Family are:

    Cuba, North Korea, Iran.

    ALL THE WAR IS ALL ABOUT THE MONEY AND POWER!!!

    The Peoples of the World don’t want war, just the “Governments”! Just who are the TERRORISTS? Matter of perspective I guess….to us average people, it is the ‘money-changers’, to the Rothschild Controlled/Owned “Governments”, it is anyone that would challenge their power and financial structures!!!! Just ask Iraq, Libya, Afghanistan, Sudan and ALL the others that have tried to rule their own destiny! You get bombed to oblivion, then LOANED the rebuilding funds, from Rothshild controlled World Bank, IMF, etc. who then ‘conveniently’ install a NEW Central Bank in your country, you know, so you can have easy access to their slave capital with no hope of ever being able to REPAY THE DEBT!!!

    IF CR really wanted to improve their financial condition, they would take those Billions in USD and buy GOLD, then re-issue the Colon as a Gold Backed Currency, and then WATCH as the value of the Colon skyrockets in the world exchanges. CR would become one of the most financially stable and powerful economies on the PLANET!!! (right up until the tanks roll in and the drones take over the skies) PURA VIDA!!! Screw it, gonna go ride my bike!

    • disqus_r8w0IwvvLw

      I love you! You have my mind! Like minded people band together down here so “the powers that be”can drone us all at once. That would be the problem.

      • Tj Sessions

        Thanks guys, however, WHO cast a down vote? ROFL….what a sleeper! No escaping the shills I guess……

    • dr meno

      WOW I thought I was the only informed ex pat here. YOU ARE RIGHT ON TJ, Actually the Rothschilds own central banks in 171 countries, Ummm talk about world dominance by the NWO.
      Email me for a full list, [email protected]

      These are very important videos to watch about the world situation and how it could relate to CR

      Austerity in Costa Rica, How the Presidents sold the country.
      https://www.youtube.com/watch?v=FPRQD9-KmK4

      Bank$ters Will Reposses Your Cities, Counties, & States. Buying up bonds, cents 2 $$’s.
      http://www.youtube.com/watch?v=-rqqw63EDxs

      http://www.youtube.com/watch?v=xgiPD-w23Eo
      QE3, And the Repossession of USA

  • Aitor Xaranga

    Agree! Panama hasn’t done that badly. Then look at El Salvador and Ecuador, both on the left side of politics, but absolutely adore Uncle Sam’s greenbacks!

    • Tj Sessions

      I chose CR over Panama to live ONLY because of the dollar “issue”! When the dollar tanks (happening now), those countries using the dollar will crash hard and fast — CR will too, as this huge ship sinks it will create a sucking whirlpool, tugging all along in the aftermath! But, we will go down a bit slower than the others, IMO. In the mean time, I continue to plant and harvest!

  • dr meno

    WOW I thought I was the only informed ex pat here. YOU ARE RIGHT ON
    TJ, Actually the Rothschilds own central banks in 171 countries, Ummm
    talk about world dominance by the NWO.
    Email me for a full list, [email protected]

    These are very important videos to watch about the world situation and how it could relate to CR

    Austerity in Costa Rica, How the Presidents sold the country.
    https://www.youtube.com/watch?v=FPRQD9-KmK4

    Bank$ters Will Reposses Your Cities, Counties, & States. Buying up bonds, cents 2 $$’s.
    http://www.youtube.com/watch?v=-rqqw63EDxs

    http://www.youtube.com/watch?v=xgiPD-w23Eo
    QE3, And the Repossession of USA

    Why don’t they consider going with the YUAN, the Chinese currency

  • dr meno

    So That is why Obama was down here. Maybe we need to go to the Chinese YUAN.

    CR should of arrested him for International War Crimes. There is an outstanding warrant on him and Bush ,and other war criminals. No one has the huevos to pull that off.

    • Tj Sessions

      WHY does the POTUS go anywhere in today’s world of Live Video Conferencing? Probably has NOTHING to do with how big the payload of a 747 is…..imagine, stops in Mexico and Costa Rica, pick up TONS of cocaine and pot and back to DC, “Cartel Central” — all with NO INSPECTIONS……Obummer is just a MULE…..and then Laura goes, ‘hmmmmm, I can do that too’……oops, busted…….again, CR is no where near as good as corp. USofA when it comes to corruption and drug smuggling!!! Keep trying CR…..maybe your big brother will toss you a bone!
      (just my creative musings folks)

      • dr meno

        Well TJ Just so happens your creative musings has rings of truth behind it. Yes the US military are the biggest drug traficantes in the world, and don’t forgot the arms dealings. Afganistan heroin production went up 90% since the usa has been there. AND you wonder why I am an Ex Pat.

    • Randy Roden

      who put out the warrant? Quite frankly, I think you are full of it!!!

      • dr meno

        Well my friend, my uninformed friend. The International Tribunal in Mylasia and I believe the Prague. AND FOR BUSH and his cronies too. ALSO there are impeachment proceedings going on right now against Obama. Are you denying that there should not war crimes brough tup against the past 2 criminal presidents. I don’t blame you for being SO uninformed. The media PREESTITUTES are doing their jobs well. Stick with me my friend and I’ll Awaken you.
        Impeach Obama. A Documentary by Shawn Stone, son of Oliver Stone.
        http://youtu.be/atIxni7fT-g

        • Marcel M. Pfister

          The international tribunal in where? Mylasia? You mean Malaysia? There is no “international tribunal” in Malaysia. “The Prague”? You probably mean “The Hague”. Too much weed?

          • dr meno

            Breaking news: Bush & Blair FOUND GUILTY of War Crimes
            http://www.youtube.com/watch?v=OAQ6niJpk-c

            This is the one for Bush and Blair. There IS an International Tribunal in Malaysia

          • Marcel M. Pfister

            Here is what Wikipedia has to say about this:
            The Kuala Lumpur War Crimes Commission (KLWCC), also known as the Kuala Lumpur War Crimes Tribunal, is a Malaysian organisation established in 2007 by Mahathir Mohamad to investigate war crimes. The KLWCC was instigated as an alternative to the International Criminal Court in The Hague, which Mahathir accused of bias in its selection of cases to cover.

            Here is what Marcel has to say about this:
            I cannot stand Mahathir Mohamad, Malaysia’s former Prime Minister. The man is resonsible for fostering ethnic tensions between Malays and Chinese during this time in office. He is also a cheap islamist, just like Erdogan in Turkey. Based on that logic, any fool may set up his own “tribunal” on anything. Bush and Blair are definitely not losing any sleep over this nonsense.

  • dr meno

    If any one wants to use my website for a gathering place for ex pat’s, by all means, I will do something to get like minded people together in CR.

    http://www.radiopacsur.com

  • Derryl Hermanutz

    After watching all those eurozone periphery countries go bankrupt because they abandoned their national currencies for the euro, and this so-called “economist” Luis Loria thinks Costa Rica should follow them down that same sewer of debt slavery in a foreign currency? I don’t know who owns CR’s central bank, but at least the CB’s President Bolanos understands the risk of using somebody else’s currency as your national money. I agree with him that CR would be better off LESS dollarized, not more.

  • Marcel M. Pfister

    What a heap of absolute nonsense by Tj Sessions. Is this the typical intelectual level of the readers here?

    • Tj Sessions

      OK, so straighten me out — Caveat —- you must provide legal precedent and case citings….WHICH I can for ALL that I say!!! Let me know when you are ready to begin your education and keep your “opinions’ to yourself when they are just UNSUBSTANTIATED gaseous secretions from your rotting, unused cranium, which obviously is suffering a cranial-anal inversion!!!

      • Marcel M. Pfister

        LOL – I “must” provide legal precedent and case citings”? What are you? The International Tribunal in The Hague?

        • Tj Sessions

          You MUST, but only if you undertake a discussion that includes facts rather than opinions. I see that you don’t. Sorry about all the big words, I was trying to show you how silly “opinions” can be when they are unaccompanied by research and substantiated information. So, you still haven’t provided anything REAL to challenge my “heap of absolute nonsense”…….let me know when you have something other than your unqualified opinion and in the mean time, in little words- try and pull your head out of your arse. And next time you endeavor to challenge someone’s “intelectual” level, get out a dictionary so you CAN SPELL IT CORRECTLY!!!! (LOL, poor fool)

          • Marcel M. Pfister

            There’s nothing like getting a chuckle out of people, isn’t there? I see no facts in your postings whatsoever. They are full of warped perceptions, devoid of any real facts on the ground. But then again, if your universe centers around Utah, no wonder. Mentally, you probably never went “outa state”.

  • 92 proof

    I spend alot of money in Costa Rica, Exchanging dollars is a pain in the ass, but in a small way the countrys money helps define its unique identity to the world, a $5 subway sandwich is still the same price in Jaco, just like it is in the US…. check out this vid, hope you like. http://www.youtube.com/watch?v=fDDGtMvZU3Q

  • dr meno

    What is this MY Disqus crap. It keeps jumping me around.

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