Monetary policy in Ecuador 1999-2015

Abstract

The aim of this study is the systematization and historical analysis of the existing information about the instruments of the monetary policy during the 1999 and 2015 period, which has had two issues:  the first without dollarization, and the second with dollarization, as well as the reforms in the Law of Reordering in Economic Matters and the New Organic Monetary and Financial Code, which sets Monetary Policy instruments, ensuring the liquidity of economy and the meeting of the pursued objectives.  This research allows us to consider the role of Monetary Policy as well as the instruments used by the Central Bank of Ecuador, before and after dollarization, taking as a point of reference the devaluations, inflation, and gross domestic product growth in the indicated period.As a conclusion, if there is domestic liquidity, monetary authorities can guarantee the management of monetary policy instruments, which does not happen when there are exogenous factors, such as declining  oil prices, revaluation of dollar,  and devaluations in neighboring countries. Because of dollarization, Ecuador cannot devalue its currency, then the question is, what to do to address the global crisis.