Complicates Ecuador

Complicated Ecuador 2 August 2009 the President of Ecuador, Rafael Correa Delgado is becoming closer to Chavez, and this issue noted in the Ecuadorian economy. The latest decision of the Correa administration, remove it from autonomy to the Central Bank of Ecuador can determine the beginning of the end of dollarization in Ecuador. With the reform approved by the Legislative Commission of Ecuador, in which it decided the Elimination of the autonomy of the Central Bank, the President of Ecuador goes to take absolute control of what make the Monetary Authority. According to the trade: With the project remains in the hands of the Faculty Executive set monetary, credit, foreign exchange and financial policies. For this purpose, the project reform articles which relate to the creation of the directory of the entity and its powers. Legislative Committee claimed in a statement: the reforms are intended to eliminate its autonomy (Central Bank) and establish a new conformation of the directory of the entity, its powers, as well as adjusting the system of remuneration of their staff. Without a doubt, this is bad news for those who still believe in the sustainability of the economic model of dollarization of the Ecuadorian economy. What I will do from now on the Central Bank of Ecuador? Simply, obey orders of the Government of Ecuador.

And is highly tested by history (e.g., the American economist Alan Blinder has done so), the smaller is the independence of the Central Bank, greater is the expected inflation rate. It is a government capable of influencing the decisions of the Central Bank can not avoid the temptation. How to put in front of a child, a basket full of sweets and expect to not feel tempted to take some without anyone realized. The Ecuadorian Government will set more of the account on the State of the economy and give orders to the Central Bank in this regard.

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