On November 2019 I went back to Venezuela, and the biggest shock for me was that people started trading goods using US Dollars. This isn't "legal", but it has become so common that I hardly ever had to have the official currency "Bolivar" with me during the three week period that I was there. I was told that trading using US Dollars became mainstream during the blackout period on which you had no access to any electronic means to pay and given that Bolivares in cash were scarce, people began using US Dollars as currency. Al tough both are accepted.

Anyway the problem goes much much deeper. But I wanted to know how is this called and if any other country has ever gone through a process similar to this one before?


When the switch from national currency is to US dollar it’s called dollarization (this mostly happens for US dollar but there are exemptions like Montenegro using euros) and in general it’s called currency substitution. It often happens when people lost the trust in the local currency or if it’s impractical to have local currency (for small states like Montenegro).

Past examples are Equador and El Salvador or Zimbabwe. This list is not exclusive but those are the major ones you want to look at.

Also note that in case that people still use both currencies the currency substitution can be only partial but from my understanding Venezuela is close to full substitution.


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