American economist Steve Hanke has drafted a formal legal proposal to officially dollarize Venezuela, a sweeping monetary overhaul designed to replace the bolívar and dismantle the Central Bank. Working alongside Venezuelan National Assembly Deputy Antonio Ecarri, Hanke’s legislative framework aims to permanently curb hyperinflation by stripping the government of its ability to print money or manipulate interest rates.
The Anatomy of a Monetary Overhaul
The push for official dollarization comes as Venezuela continues to grapple with severe economic degradation. According to statements reported by Cactus24, Hanke emphasizes that controlling inflation remains the absolute key to restoring stability. Without stable prices, he argues, an economy has nothing. The American economist links the collapse of Venezuela’s oil industry directly to its monetary policy, noting that as petroleum revenues dried up due to infrastructure deterioration, the government resorted to printing money to cover public sector salaries, debts, and pensions.
Under Hanke’s draft legislation, the bolívar would be entirely phased out in favor of the United States dollar. Crucially, the proposal eliminates the traditional functions of the Banco Central de Venezuela. By removing the central bank’s authority to emit new currency or set interest rates, the framework seeks to establish an institutional anchor that prevents future administrations from financing government excesses through the printing press.
Political Alignment and the Lápiz Movement
The legislative effort is not happening in a vacuum. Hanke is collaborating closely with Venezuelan lawmaker Antonio Ecarri, a prominent advocate for monetary reform. Ecarri has maintained since 2017 that dollarization serves as the vaccine against hyperinflation. According to Ecarri’s public statements cited in the regional coverage, the lawmaker welcomed Hanke as a monetary and energy advisor to the Diputación Nacional del Lápiz parliamentary team.
“Venezuela is already dollarized in fact,” Ecarri noted, pointing out the painful disparity faced by citizens still paid in rapidly depreciating bolívares. Teachers, nurses, and pensioners bear the brunt of this currency erosion daily. The proposed bill aims to transition the economy from an informal, chaotic dollarization to a formalized legal structure. Proponents argue this will protect both private property and household incomes from arbitrary state devaluation.
Feasibility and Global Comparison
Despite the steep political hurdles inherent in Venezuela’s fractured political landscape, Hanke remains optimistic about the project’s legislative prospects. He estimates the probability of the bill passing through the National Assembly and becoming law at between 50% and 80%. If enacted, Hanke told Fortune that the transition would represent the largest conversion from a national currency to an alternative since the introduction of the euro in 1999.
Proponents claim that successfully implementing the framework could position Venezuela as the most competitive economy in the world, especially given that the bolívar has lost 78% of its value against the dollar over the past year, as detailed by Banca y Negocios. Parliamentary leaders plan to launch an intensive national debate to move the modernization effort from conceptual policy into binding law.
The Road Ahead for Venezuela’s Economy
As this legislative project moves toward formal debate, economists and policymakers are watching closely to see how the legislative blocs will respond. While the informal economy already operates largely in greenbacks, codifying the dollar into law requires surrendering sovereign monetary control. Yet, with public sector wages effectively vaporized by inflation, the pressure from lawmakers like Ecarri and technical architects like Hanke highlights an ongoing struggle for structural economic survival. Will the National Assembly risk embracing a dollar-standard future, or will the bolívar linger in an agonizing twilight? Share your perspective below.
