Venezuela taps economist Steve Hanke to lead dollarization push amid 400% inflation

Venezuela's legislature named Johns Hopkins economist Steve Hanke special adviser on economic, monetary and energy affairs, tasking him with drafting a full dollarization bill that would abolish the bolivar and close the central bank. Inflation in the country is now rising at roughly 400% a year, the worst globally, while oil production remains far below pre-Chávez levels. Hanke, who has previously helped Montenegro, Ecuador and Zimbabwe adopt hard-currency regimes, estimates a 50%-80% likelihood that the proposal will become law.

He contends that price stability is a prerequisite for boosting oil output, which in turn could fund repayment of a $250 billion debt package involving Russia, China and major oil firms. The plan also aims to end the government's habit of financing deficits by printing money, a practice that continued after the ouster of Nicolas Maduro. Hanke is working with Assembly member Antonio Ecarri on the draft, and notes that many Venezuelans already conduct transactions in dollars or dollar-linked stablecoins. If enacted, the shift could spark foreign investment, revive the credit market and accelerate economic growth.