CLAIM: On June 22, 2019, the Twitter account @AfricaFactsZone tweeted that “Zimbabwe is the only country in the world, that doesn’t have its own currency”.
VERDICT: False
By ZimFact Staff
Zimbabwe is not the only country to have abandoned its currency for that of another country. Ecuador, Ecuador, East Timor, El Salvador, Marshall Islands, Micronesia, Palau, Turks and Caicos, and the British Virgin Islands have taken similar measures.
The basis for the claim
In an interview with Bloomberg published on June 21, 2019, President Emmerson Mnangagwa had said Zimbabwe needed its own country, as he was unaware of a country without its own unit.
“I am not aware of any country which has no currency of its own, but that is not my field – I am a lawyer – but I am told that except for Zimbabwe I haven’t been told of another country which doesn’t have its own currency. Even poor countries have currencies from what I hear, so we intend to introduce our own,” Mnangagwa was quoted as saying.
However, when Zimbabwe adopted the US dollar as its main currency in January 2009, and later formally demonetised the Zimbabwe dollar that year, it was not the first country to abandon its currency for another.
Ecuador and El Salvador adopted the US dollar in 2000 in order to deal with hyperinflation. Beyond “dollarization”, which is when a country adopts the US dollar as its own, other countries allow the dollar to circulate alongside their own currencies.
Why countries adopt the US dollar
Countries that have dollarized have done so mostly to deal with the collapse of their currencies. Ecuador dollarized in 2000 after the currency, the sucre, collapsed due to a financial crisis, pushing people to put their holdings into dollars.
Dollarisation is not without its pitfalls. In March 2019, Anna Ivanova, IMF’s mission chief for Ecuador, said the dollar made Ecuador’s exports expensive.
“Raising Ecuador’s competitiveness and raising productivity will require a concerted effort. Since Ecuador uses the US dollar as its currency, it is not able to use exchange rates as a tool to make its exports more competitive in the global market. Therefore, the country will have to rely on policies that allow for internal devaluation instead,” she said.
Conclusion
Zimbabwe is not the only country to have discarded its own currency for the US dollar. The country is only one of several others to have done so.
Do you want to use our content? Click Here
