2. What are some possible problems with dollarization?

As you pay for your purchase in Ecuador with U.S. dollars, you receive some coins in change. While these coins are the size you expect, something is different. You look at the coins and notice these are not U.S.
quarters, dimes, and nickels. What’s going on?
While the U.S. dollar is the official currency of Ecuador, the country does not have enough U.S. coins to handle the many business transactions.
Paper currency is abundant. As a matter of fact, over 60 percent of all U.S. paper money is in circulation outside the United States. But coins are scarce. Due to this shortage, Ecuador had to create its own coins with a similar shape but a different design.
In the late 1990s, Ecuador faced many economic difficulties including high inflation, increased poverty, and a declining value of the sucre (its previous currency). Actions to address these problems included adoption of the U.S. dollar as official currency.