By Richard Giedroyc, World Coin News October 26, 2009

When someone says the world is getting smaller they usually mean communications have gotten to be so efficient that it appears the world is shrinking. I could say the numismatic world is getting smaller as well as fewer entities are issuing their own coins and bank notes than in the past.

One quick but very unscientific way of proving this is to stack the Krause Standard Catalog of World Coins representing each of the last four centuries against each other to see which are the thickest. Yes, I am aware there are more non-circulating legal tender commemoratives than ever before, but there are also fewer entities issuing coins as well.

Several Caribbean islands are considering “dollarizing” their economies, abandoning their own independent currency systems in favor of using the U.S. dollar exclusively.

Countries that have officially dumped their own coin and bank note systems in favor of using the U.S. dollar include Ecuador, El Salvador and Panama. Coins and currency of Australia, the European Union, New Zealand, and Russia are likewise used officially or unofficially as a substitute currency in other countries.

Among the countries that have “semi-dollarized” are Armenia, Cambodia, Georgia, and Zimbabwe. Other countries use the dollar unofficially.

The latest countries considering dumping their own currencies in favor of the U.S. dollar are all in the Caribbean – Aruba, Curaçao and St. Maarten. The BES islands of Bonaire, St. Eustatius and Saba, also located in the Caribbean, have already made up their minds.

Under a United Nations convention, the BES islands have established an Exclusive Economic Zone. They will use the U.S. dollar as the exclusive legal tender beginning Jan. 1, 2011. The initial exchange rate is planned to be 1.79 NAF to the U.S. dollar. There will be a 30-day overlap in which the Antillean guilder will continue to simultaneously be legal tender.

According to Dutch Ministry of Finance spokesman Richard Doornbosch, the BES islands made the decision to dollarize based on future macro-economic stability, as well as economic and financial integration in the region.

Aruba, Curaçao and St. Maarten held an “Opportunities and Risks of Dollarization in the Dutch Caribbean” one-day conference in Curaçao in late August. According to the Aug. 25 The Daily Herald St. Maarten newspaper, “St. Maarten’s Finance Commissioner Xavier Blackman told The Daily Herald that the conclusion was that a perfect system didn’t exist and in his view dollarization was only an option.”

Dollarization was opposed by Central Bank of Aruba President Jane Semeleer. Bank of the Netherlands Antilles President Emsley Tromp said the Antilles hasn’t felt the effects of the world financial downturn due to a debt relief program and funds made available by the Dutch government. It was Tromp who instigated the entire dollarization discussion when he said it might be better to dollarize the local economy to mitigate negative effects of the current world financial crisis.

Semeleer said if the other islands choose to use U.S. dollars exclusively as their currency this could put the Aruban dollar under “enormous pressure.”

Coin collectors shouldn’t abandon all hope, fretting a continuing demise of the number of foreign currencies to collect in the future. Sometimes these nations change their minds, such as may be happening now in Ecuador.

Ecuador’s President Rafael Correa is against dollarization, which took place beginning in 2000 following an economic crisis. Dollarization is still popular with citizens, however the Ecuadorian legislature approved a bill July 30 that places the central bank under the executive branch of government, giving Correa the control he has been seeking.

Former Finance Minister Mauricio Pozo was quoted in the July 31 The Wall Street Journal as saying, “Now that all the power is concentrated in the executive branch with a subservient central bank, the risk of de-dollarization has increased.”

But for now, you can still find Sacagawea dollar coins in circulation in Ecuador.