If you are a trader, you will surely agree with us when we say the answer to the question ” What is Forex Trading? “ depends upon the nature as well as the other elements that are related to this market. For us, forex trading is the combination of art, science and technology when dealing with various financial instruments in the trade. Mentioning financial instruments, a wise trader should also have a knowledge on the different currencies that are used in various countries. The US Dollar is definitely one if not the most famous currency in the world. As a matter of fact, there are several countries around the world that share the privilege of using the US Dollar as a legal tender for domestic and international transactions. Here is a list and economic background of these countries.
1.Ecuador
Prior to the dollarization of Ecuador in the year 2000, the people of Ecuador utilized other legal tender such as Gran Colombia, Ecuadorian Peso, Peso Fuerte and others. These earlier types of currency were not able to survive the very high inflation rate for Ecuador so the Ecuadorian Government headed by the President decided to scrap the local Sucre currency, and converted Ecuador’s economy over to the US dollar.This action was painful and controversial to most people but it somehow helped the entire country from a total economic collapse due to inflation.
2.El Salvador
Similar to other nations that adopted the US Dollar, El Salvador’s decision to dollarize was initiated in 2001. Before the adoption of the dollar, their currency was called El Salvadoran Colon but because of the ill effects of the civil war in their economy, they decided to stabilize their economy via dollarization. At the moment, the country is benefiting from a more stabilized economy and increased investment.
3.Marshall Islands
The inhabitants of Marshall Islands didn’t have enough means to print their own money due to the instability of their economy so the leaders of the Island decided to adopt US Dollar as their official currency. Since their adoption, Marshall Islands is experiencing the advantage of not having the expense of running a central bank. Moreover, the US Dollar is convertible when they decide to trade or travel outside the country. In most research conducted by experts, it was found that poverty is an extreme issue in the said country. Their devastating economic condition is due to scarce natural resources, high unemployment rates and wealth inequality. As per statistics, only 39.3% of the population aged 15 years and above is employed.
Conclusion:
What we have on the list is just three of the countries that have totally adopted the US Dollar as their legal tender. As a trading enthusiast who is fascinated by ” What is Forex Trading? “ The details of the article which we have made for you helps you realize the power that the US Dollar can do towards uplifting the economy of a particular country.
