Dollarization in Latin America: wave of the future or flight to the past?

Ecuador undertook official dollarization in 2000 when it destroyed its own currency, the sucre, and adopted the dollar. El Salvador converted all financial instruments to dollars, and Guatemala now allows transactions to be carried out in any currency. Both assumed that the dollar would soon displace their domestic currencies. This experience suggests that dollarization may become progressively easier for other countries. Indeed, there are numerous predictions of a completely dollarized Western Hemisphere (Schuldt 2003; Trejos 1999). Will other countries in the Western Hemisphere implement official dollarization this decade? Could Latin America become an official dollar bloc, with the dollar as the common currency? Alternatively, will dollarization be a momentary phenomenon, whose promise is tarnished by the economic performance of countries that have chosen hard pegs?