Venezuela should abandon the bolívar and adopt the US dollar rather than attempt to copy Peru’s monetary system, according to economists Steve Hanke and Emilio Ocampo.
Writing in a joint analysis, the pair argued that Peru’s success in controlling inflation depended on political and institutional conditions that could not simply be transferred to Venezuela, where the National Assembly is debating how to tackle soaring prices and the collapse of the national currency.
Peru introduced its current inflation-targeting framework in 2002, after the hyperinflation and economic crisis of the late 1980s and early 1990s. The system has generally kept inflation within a target range of between 1 and 3 per cent, while supporting a relatively stable sol and sustained economic growth.
But the framework relies on more than interest-rate decisions. Peru’s central bank uses foreign-exchange intervention, substantial reserves, reserve requirements, sterilisation measures and other safeguards to manage financial risks linked to the widespread use of dollars.
The International Monetary Fund said in its latest assessment of Peru that the country’s international reserves had reached about US$100 billion by April 2026, equivalent to more than 29 per cent of economic output. It also highlighted Peru’s fiscal discipline, with the deficit narrowing to 2.2 per cent of GDP in 2025 and public debt standing at about 30 per cent of GDP.
Why Peru’s monetary system cannot be replicated in Venezuela
Hanke and Ocampo said Peru’s results were rooted in a professional and independent central bank, continuity among economic officials and a political system that had repeatedly preserved fiscal and monetary rules.
Julio Velarde has led the Central Reserve Bank of Peru since 2006, serving through governments with sharply different political positions. The authors said that institutional continuity, alongside the country’s accumulated financial buffers, was central to the system’s credibility.
Venezuela, by contrast, has struggled with what the economists described as populism, fiscal dominance and weak institutions. They argued that the country’s difficulty was not a lack of technical expertise, but an inability to maintain strict rules during periods of political and economic pressure.
Peru’s transformation also took years. Inflation did not remain below 10 per cent until 1997, nearly seven years after the initial stabilisation programme launched under Alberto Fujimori. The current operating framework was not established until 2002.
That history, the authors said, made it misleading to treat Peru’s model as a ready-made solution for Venezuela. They warned that attempting to reproduce it without the same institutional foundations could prolong, rather than resolve, the country’s monetary crisis.
Instead, Hanke and Ocampo called for the bolívar to be withdrawn and for the US dollar to become Venezuela’s legal tender. Hanke is advising Antonio Ecarri, a member of Venezuela’s National Assembly, on economic, monetary and energy affairs.
The proposed approach would remove the ability of Venezuelan authorities to finance government spending by issuing more money, the economists argued. In their view, dollarisation would provide a more immediate source of stability and prevent monetary policy from being altered for political purposes.
