Venezuela's National Assembly Names Steve Hanke Economic Advisor for Dollarization Push

The Venezuelan National Assembly has named U.S. economist Steve Hanke as a special advisor for economic, monetary, and energy matters, tasking him with developing measures against hyperinflation, according to Fortune magazine.

Hanke, a university professor and proponent of monetary reform, champions complete dollarization. This would involve eliminating the Venezuelan bolívar and adopting the U.S. dollar as the official currency. His proposal also includes dissolving the Central Bank of Venezuela to prevent the government from printing money and controlling interest rates. Hanke asserts that price stability is indispensable for Venezuela's economic recovery.

He linked inflation to the decline of the oil industry, stating that when oil revenues dwindled due to infrastructure deterioration, the government financed debts by printing money. Hanke is working closely with National Assembly member Antonio Ecarri, who has publicly supported dollarization since 2017, calling it a "vaccine against hyperinflation."

Ecarri expressed gratitude for Hanke's advisory role and announced plans to promote a national debate on the proposal. He noted that Venezuela is already de facto dollarized but that essential workers like teachers and nurses are still paid in bolívares, which are rapidly losing value. Ecarri aims to frame dollarization as an economic modernization measure to protect Venezuelan income and private property, limiting the currency's use to finance government excesses.

Hanke told Fortune that he estimates a 50% to 80% probability that the National Assembly will approve the dollarization project and enact it into law.