Author and editor‑in‑chief: Vitaliy Kisterny 13.09.2026 20:15:00

While economists debate de‑dollarization and the shrinking share of the dollar in global reserves, the American currency has long become everyday life in dozens of countries around the world.

According to various estimates, between 60 and 80 percent of all cash dollars circulate outside the United States—that is, hundreds of billions of banknotes. In Ecuador, El Salvador, Panama, and Zimbabwe, the dollar has officially or effectively replaced the national currency.

In Argentina and Lebanon, people keep their savings in dollars, not trusting local money. This “parallel” dollar empire is a quiet but powerful pillar of the American currency, rarely mentioned at financial conferences.

Photo: © Belnovosti / dollar and rubles. Author Vitaliy Kisterny Countries that have abandoned their currency

Ecuador is the most famous example. In 2000, the country experienced hyperinflation and a banking crisis, and the government made a radical decision: to completely abandon the national currency, the sucre, and switch to the U.S. dollar. Since then, U.S. banknotes have been the sole legal tender in the country.

El Salvador went even further. In 2001, the country officially switched to the dollar, and in 2021 it became the first in the world to recognize Bitcoin as a legal tender. However, the Bitcoin experiment did not replace the dollar—it remains the primary currency for everyday transactions.

Panama has used the dollar since 1904. In Zimbabwe, after several waves of hyperinflation, the dollar was the official

This phenomenon is not unique to Argentina. In Venezuela, Nigeria, Turkey, and several other high‑inflation countries, the dollar serves as a “parallel” currency—unofficial but widely used.

Why this matters for the dollar

Billions of cash dollars circulating outside the United States are not just an interesting fact. They represent real support for the American currency that is independent of Fed actions, geopolitics, or inflation data.

When a resident of Argentina or Lebanon buys dollars, they create demand for the American currency that is not reflected in official statistics. This demand is stable and insensitive to interest rates. Even if the Fed cuts rates, people in economically unstable countries will continue to buy dollars simply because they have no alternatives.

This means the dollar has an “inbuilt safety net” that is rarely mentioned. As long as there are countries with high inflation and weak institutions, demand for cash dollars will persist.

The flip side: loss of control

However, this “parallel” dollar empire has a dark side. Countries that depend on the dollar lose control over their monetary policy. They cannot print money to stimulate the economy, cannot devalue their currency to support exports, and cannot manage interest rates.

Ecuador, after adopting the dollar, lost the ability to conduct an independent monetary policy. During crisis periods, the country can rely only on fiscal measures and external borrowing. El Salvador faced the same constraints.

Moreover, dollarization means the country becomes vulnerable to Fed policy. When the U.S. central bank raises rates, borrowing conditions tighten for Ecuador, Panama, and Argentina—regardless of their own economic needs.

What's next

The “parallel” dollar empire is unlikely to disappear in the coming decades. As long as there are countries with high inflation and weak currencies, people will seek refuge in dollars. This creates a sustainable demand for the American currency that is independent of Washington.

However, this demand is not infinite. If China can offer a viable alternative—such as a digital yuan available for cross‑border settlements—some countries may gradually shift. But until such an alternative exists, the

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