El Salvador to launch U.S. dollar as official currency
SAN SALVADOR, El Salvador (AP) -- The U.S. dollar becomes legal currency
in El Salvador on New Year's Day, and bankers say they're ready for the change.
The Central Bank has sent millions of dollars to banks around the country
prepare for the new measure, which will allow the greenback equal status with
the national currency, the colon for buying goods, paying salaries or doing
"The banks are ready to work in dollars," the head of the Salvadoran Banking
Association, Claudio de Rosa, told a news conference.
He said banks had carried out "changes in the banking system, automatic
accounts, operations and training of personnel."
"Everything indicates there will not be great problems, though there could
some minor, correctable mishaps because of a lack of knowledge of the money
by some clients," he added.
The measure, approved in November by congress, is part of a trend in the
region, where countries facing chronic inflation and jittery investors hope use of
the dollar will stabilize and boost their economies.
Critics say it limits national sovereignty, reducing the ability to respond
Panama -- Central America's richest nation -- has long used the dollar.
adopted it in September. Argentina has pegged its own peso to the greenback.
Guatemala plans to adopt the dollar alongside its quetzal on May 1. Much of
communist Cuba's economy also operates in dollars, though officials say that is a
De la Rosa said the change would "bring permanent benefits for the country
The colon itself will be fixed at 8.75 per dollar. The law also allows
currencies to be used for contracts and accounts.
De la Rosa warned Salvadorans to avoid giddy spending and indebtedness
the face of what are expected to be sharply improved credit terms.
"The reduction in the rate of interest and the possibility of longer credit
demands that we forcefully recommend the need to maintain moderation in
personal spending and rationality with prudence in investment by businesses," he
Some Salvadorans have expressed concern they will have trouble making change
in the new currency, though many here are familiar with the dollars because
Salvadorans living in the United States send home an average of $4 million a day
-- making remittances the third-largest source of national income.
Copyright 2000 The Associated Press.