THE Hyatt US dollar issue possibly has brought the concept of US dollarisation to the fore. I would like a few economists to comment on the pros and cons of US-dollarising the economy.

One can see a stabilising economic effect it has had on Venezuela and Zimbabwe, amongst others-products are back on shelves, the population isn’t worried about the declining purchasing power of a local currency, and there’s no more hoarding of US dollars by those with connections. (Note that it hasn’t helped other Venezuelan issues due to political uncertainties, and investment does not follow uncertainty. Trinidad and Tobago thankfully has a stable democracy, along with a strong history of peaceful transfer of power.)

US dollarisation would also lower our foreign transaction costs, potentially reducing our foreign reserves as we would no longer need to prop up an overvalued dollar; and the black market would cease to exist.

In addition, it would allow equal access to US dollars, which contrasts with the situation now where large conglomerates and big businesses dominate each sector by usurping all of the available foreign exchange (forex) due to their close relationships with the commercial banks (read: large loans, interconnected board members and common, large stakeholders).

Access to forex is more than just for importing and selling-the lack of availability also stymies upstart businesses, particularly in the service sector, as where would they get foreign exchange for that next great idea?

Our innovation is being stifled currently as many great enterprises worldwide start in a garage somewhere; but locally, such enterprises would never get much forex to grow under the current system. Everything can’t be done on the decreasing limits of one’s credit card.

Besides national pride, what are the advantages of our own currency?

I’d say with US dollarisation, we’d have a stronger economy and greater prosperity for all, which would outweigh this sentiment. Furthermore, if we have neither exercised the floating mechanism in decades in favour of an essentially pegged currency, nor been effective at using our T&T dollar interest rate to really attract T&T dollar investments, then why not make the switch?

Additionally, it should be noted that the ever-present possibility that there might be a devaluation does not engender confidence in keeping savings in T&T dollars.

Our Finance Minister has insisted that this will not happen, but their track record for backtracking (Petrotrin closure and property tax come to mind) and the chance of an IMF (International Monetary Fund) intervention make the likelihood of such devaluation very real, especially in this case where the blame could be shifted to the institution as part of its fiscal requirements.

I ask this question in parting: if given the choice to accept US currency or T&T currency for a modest-sized transaction, which would you choose? If the answer is the former by a wide margin, as I suspect it is, then what national pride is there for a currency that is always second choice?

C Alexander Port of Spain