When you hear that the majority of U.S. currency in circulation is held outside the United States, you may be envisioning piles of dollars in a Beijing treasury or under a Russian billionaire's mattress. But I've been discovering during this trip how much the U.S. dollar has become either the actual or de facto currency of various developing countries.
For example, if you've ever puzzled over the rarity of the Sacagawea coins, wonder no more: they mostly seem to have ended up in Ecuador, which retired its sucre several years ago and now uses U.S. dollars as official currency. Ecuador still mints some centavo coins for amounts less than $1, and the $1 bill is far less common than $1 coins. This change aroused the contempt of other South American countries, which at various times may have pegged their currency to that of the U.S. to minimize inflation, but hung onto their power to print bills. When we excused our clumsiness in dealing with Peruvian money to a guide by explaining that we'd been spoiled by our home currency in Ecuador, he laughed and said that the Ecuadoreans were the joke of the continent for giving up their own money and having foreigners' faces on all their bills and most of their coins.
And indeed in Peru and Argentina, people generally expect travelers to use the local currency. The one time I saw something denominated solely in dollars in Argentina was the $140 visa fee charged only to Americans. (The small town of Colonia, Uruguay, which gets hordes of day-tripping tourists on the boat from Buenos Aires, is less picky and accepts Argentinean pesos.) The same is true in Indonesia -- even when you were given a price in dollars, you were expected to pay in rupiah -- and of course in Hong Kong, Australia and New Zealand. Until recently, the only country we'd visited that wasn't on the U.S. dollar but where vendors were willing to accept it in lieu of local currency was Canada.
Cambodia is the first instance we've encountered of a country that nominally retains its own currency (riels), but operates almost entirely on American money. When we arrived at Phnom Penh airport on December 29 with only Hong Kong dollars in hand, the airport taxi tout directed us to an exchange service that listed various currencies, including Hong Kong's, but seemed to have bizarre prices for them. The Hong Kong dollar was at almost 8 to the U.S. dollar, and the U.S. dollar was worth more than 4000 riel, so I expected to see Hong Kong at something like 500. Yet HKD was listed as 7 and change. It took me a moment to realize that the exchange was of various foreign currencies not to riels, but to U.S. dollars.
Travel advisories on making the trip to Cambodia by crossing overland from Thailand all emphasize that one should not be fooled into exchanging money for riels at the border, despite the scam artists insisting that you'll need riels once you enter Cambodia. Visa fees and everything else can be paid in dollars.
Maybe if you aren't a tourist, you can get someone to deal with you in riels, but everything we've done in Cambodia thus far -- riding tuk-tuks and buses, visiting the Royal Palace and National Museum, buying a book in a foreign-language bookstore, getting a massage, even ordering tickets to a New Year's celebration where 95% of those attending were Khmer -- has been denominated and transacted in dollars. Occasionally a vendor will give us riels in change, because they don't have U.S. coins in circulation, so anything less than $1 will involve Cambodian bills. However, I haven't seen Sacagawea here yet.
Given the speed that the UK switched from pound notes to pound coins (in the '80s), I was really surprised to realise the US still used dollar bills the first time I visited. Even more so when I discovered that dollar coins already existed (when a NY subway ticket machine spat a handful of them at me).
Do you know the reason for the US resistance to dollar coins?
I've theorised that it's due to the "tipping" culture - a few bills are much more easily palmed, passed and pocketed than coins. That's merely the idle speculation of a tourist, though, I'd be interested to know what opinions real Americans have :)
My theory is that the clinking pocketfuls of change that tend to occur in countries with large-value coins (England, Japan, Hong Kong, etc.) are very inconvenient.
The theory I've heard most often to explain why Americans don't commonly use dollar coins is just that we still have dollar bills, and that people won't accept the alteration unless they can't use the familiar alternative. I don't know if this is true in other countries. (Have others been successful in introducing coins for a denomination that was previously only in bills, while still retaining the bills?)