ABSTRACT
This chapter discusses the explanation of the process that led Ecuador to one of its history’s sharpest crises and, in the aftermath, to an official dollarization. It presents some important features of the financial structural reforms in Ecuador in its relationship with the so-called Washington Consensus. The Credit Cycles section explains the sequence of credit cycles and its double-way link with the macroeconomic performance that defined the depth of the crisis, trying to relieve the deployment of the endogenous dynamics that appeared very early in the liberalization process. The chapter outlines a couple of theoretical schemas that could help to extract some lessons and to understand the rapid deterioration of all instruments of economic policy on the hand of the monetary authority during the crisis’ climax. Besides, the macroeconomic performance continued summoning tensions in terms of a vulnerable external sector and the increasing dollarization of the economy.
