Hyperinflation

Ecuador

• Ecuador

Main article: 1998–99 Ecuador financial crisis

Between 1998 to 1999, Ecuador faced a period of economic instability that resulted from a combined banking crisis, currency crisis, and sovereign debt crisis. Severe inflation and devaluation of the Ecuadorean Sucre lead to President Jamil Mahuad announcing on January 9, 2000 that the US dollar would be adopted as the national currency.

Despite the government's efforts to curb inflation, the Sucre depreciated rapidly at the end of 1999, resulting in widespread informal use of U.S. dollars in the financial system. As a last resort to prevent hyperinflation, the government formally adopted the U.S. dollar in January 2000. The stability of the new currency was a necessary first step towards economic recovery, but the exchange rate was fixed at 25,000:1, which resulted in great losses of wealth.