[1] Severe inflation and devaluation of the sucre led to President Jamil Mahuad announcing on January 9, 2000 that the U.S. dollar would be adopted as the national currency.
Poor economic conditions and subsequent protests against the government resulted in the 2000 Ecuadorian coup d’état in which Jamil Mahuad was forced to resign and was replaced by his Vice President, Gustavo Noboa.
The Amazonian regions are mostly populated by indigenous people who are generally poorer, despite the fact that the Amazon contains Ecuador's significant oil reserves.
Ecuador's social and economic inequalities have contributed to internal tensions and political divides on a national level, which became evident during the government's response to the financial crisis.
In 2010, author and professor Alberto Valencia Granada published a book called When Success is a Crime: Filanbanco: A Case of Violation of Human Rights in Ecuador.
His book summarizes the causes of the financial crisis:In the late 1990s, Ecuador (and the entire region) experienced capital flight following the East Asian and Russian crises.
Ecuador then experienced a political-economic crisis that was aggravated by many factors: military confrontation with Peru, lack of sufficient hydroelectric energy production (due to low water levels), and difficulties in the agricultural sector because of the El Niño weather phenomenon.
The biggest victims of the economic crisis were the agricultural export industry located along the coasts, which were Filanbanco’s principal credit recipients.
Financial liberalization policies had been adopted in the early 1990s by conservative president Sixto Durán-Ballén and his vice president Alberto Dahik (widely considered the economic tsar of the government and mastermind of neoliberal policies),[6] allowing easier access to international markets and investors, but they also created a largely deregulated domestic financial sector.
[1][3] Oil prices plunged in 1998, partly in response to global economic slowdown following the Asian financial crisis, which significantly reduced the government's revenues.
These shocks created a situation where the public deficit grew uncontrollably, as the government had to recover from El Niño damage, but had restricted access to oil revenues and international financing.
Populist president Abdalá Bucaram, known as "El Loco", was declared mentally unfit by Congress and fled after nation-wide protests in 1997, and an interim government under Fabián Alarcón was in power until Jamil Mahuad was elected in 1998, just as the banking crisis was developing.
[2][3] Despite the government's efforts to curb inflation, the Sucre depreciated rapidly at the end of 1999, resulting in widespread informal use of U.S. dollars in the financial system.
Rural areas were especially affected, and metrics such as worse child nutrition, reduced educational spending, and poor health outcomes all showed that the financial crisis had severe effects.
Protests led by a coalition of indigenous peoples (CONAIE) and supported by the military occupied congress and forced President Mahuad to resign.
This early wave left Ecuador during the hardest part of the economic crisis and was composed of young people eager to work.