What the Dollarization of Venezuela Really Means for Its People and Economy

While Venezuela’s economy remains volatile, the growing use of the US dollar has created new winners and losers. This article explores the real effects of informal dollarization on prices, wages, inequality, and daily life for Venezuelans.

Venezuela's dollarization has brought temporary stability, but also deepened inequality. It reflects both economic desperation and systemic failure.

Over the past five years, Venezuela has undergone one of the most radical and unofficial transformations of its economy: the informal dollarization of everyday life. While the Venezuelan government never formally abandoned its currency, the bolívar, the population has turned to the US dollar as a means of survival. In 2019, the government of Nicolás Maduro unofficially tolerated the widespread use of dollars for transactions, citing it as a necessary “escape valve” for a collapsing economy. But what has this shift really meant for Venezuelans? Has it stabilized the economy or only deepened structural inequalities?

Dollarization in Venezuela emerged not through a planned macroeconomic policy, but as a desperate response to hyperinflation. At its peak in 2018, annual inflation surpassed one million percent, rendering the bolívar practically worthless. People saw their life savings evaporate, wages became meaningless, and basic transactions required stacks of rapidly devaluing cash. In this context, US dollars — brought in through remittances, black market exchanges, or cross-border trade — became a lifeline. By 2023, more than 60% of all transactions in Venezuela’s major cities were made in dollars, according to Ecoanalítica, a leading economic research firm in Caracas.

At first glance, this informal dollarization brought a sense of short-term stability. Supermarket shelves began to fill again, businesses reopened, and imported goods returned to stores. Prices in dollars were relatively stable compared to the daily volatility of the bolívar. For many, it felt like a fragile but real recovery. However, this apparent normalization hides a much more complex and unequal economic reality.

Access to US dollars in Venezuela is far from universal. While middle- and upper-income households in urban areas might have access to remittances or private sector jobs that pay in dollars, millions of public sector workers, retirees, and rural residents continue to earn in bolívares. This has created a dual economy, where those with dollars can maintain a certain quality of life, while those without are pushed further into poverty. According to the 2023 National Survey of Living Conditions (ENCOVI), nearly 53% of Venezuelans still report income in local currency only, with public salaries averaging under $10 per month.

This disparity is not just economic — it is also deeply social. Dollarization has widened the gap between regions, between social classes, and even within families. While some Venezuelans now speak of “a new normal” with shopping malls and cafes full of imported goods, others live on subsistence farming or depend entirely on humanitarian aid. The dollar has become both a symbol of recovery and a marker of exclusion.

Another key aspect of this transformation is how it affects state policy and sovereignty. The Venezuelan Central Bank has lost much of its capacity to control monetary policy, as prices and wages are increasingly set by market forces in foreign currency. The government has stopped publishing reliable economic data, making it difficult to assess the full impact of these changes. At the same time, the lack of a formal legal framework for dollarization creates uncertainty. Contracts, taxes, and public services are inconsistently priced, often in bolívares but indexed to an unofficial dollar rate.

In parallel, the rise of digital payment platforms like Zelle or Binance, especially in major cities, has allowed some Venezuelans to navigate dollar-based transactions without carrying cash. But this solution also requires access to stable internet, international banking, and digital literacy — luxuries for many in rural or impoverished areas. As of 2023, Venezuela remains one of the countries with the highest internet inequality in Latin America, with vast disparities in connectivity between Caracas and the interior states.

Economists remain divided on whether Venezuela should embrace official dollarization. Some argue it would formalize stability and attract investment. Others warn it would further erode monetary sovereignty and institutional capacity. But for most Venezuelans, the debate is less about macroeconomics and more about survival. People adapt in whatever ways they can: trading goods informally, using WhatsApp to quote exchange rates, or relying on family abroad to send just enough dollars to make it through the month.

It is also important to understand that this dollarization process has not solved Venezuela’s deep structural problems. Corruption, institutional fragility, and political isolation continue to hamper real economic recovery. Oil production, the backbone of the national economy, remains well below historic levels. Sanctions imposed by the United States and other countries still limit international transactions. In this context, dollarization may mask the symptoms, but it does not address the causes.

Ultimately, Venezuela’s informal dollarization reflects both a failure of the state and the resilience of its people. It is not a strategy — it is a coping mechanism. It brings temporary relief for some, new challenges for others, and a dangerous illusion of normality for all. As long as there is no political agreement or economic reconstruction plan, dollarization will remain a band-aid over a system in crisis.

For international media and analysts, understanding this phenomenon requires going beyond the numbers. It means listening to how ordinary Venezuelans live, adapt, and endure in the face of systemic collapse. It means recognizing that behind every dollar spent in a Caracas bakery, there is a deeper story of inequality, loss, and resistance.