5 Countries that use USD unofficially

Every country you visit or work in has its own currency—but in some places, vendors seem oddly obsessed with USD. You’ll be buying a coffee, and suddenly they’re asking for US dollars instead of their own currency. Weird, right? 

So why the USD love? Doesn’t that make things more expensive for locals? 

Well, don’t be too shocked—life happens, economies shift, and sometimes, trust in local currency just isn’t there. In this blog, we’ll break down how the US dollar became the default currency of global trade, which countries use it unofficially, and why they do it. Sure, politics plays a role, but history, trade, and economic stability are just as important. 

And when countries decide to “unofficially” dollarize, what do they gain in stability—and give up in control? Let’s dive in. 

How did the USD become the default currency? 

Let’s rewind to post-World War II, when the US was basically the only developed economy still standing tall (thanks, war). In 1944, the Bretton Woods agreement happened, and major European currencies got hitched to the USD, which was, in theory, tied to gold at $35 an ounce. So, the dollar was basically the golden child,literally. 

Fast forward a bit, and as other economies started rebuilding (looking at you, Germany and Japan), they went all-in on exporting stuff, and guess who was their favourite customer? Yep, the US, the big spender of the global economy. By the late 1970s, the US was running trade deficits like it was a hobby, everyone wanted to sell to them, and the US was like, “Sure, why not?” Meanwhile, in the 1970s, the US struck a deal to make oil sales globally priced in dollars. So now, not only was the dollar the life of the party, but it also had a VIP pass to the oil market. 

By the 1980s and 1990s, the dollar was everywhere. Banks were hoarding it like it was the last slice of pizza, and it became the go-to currency for global trade, even if the US wasn’t directly involved. It was like the universal translator of money—everyone trusted it, and there was enough of it to go around. So, the dollar became the “reserve” currency, meaning banks worldwide kept stacks of it. Importers could just waltz into their local bank, swap their local currency for dollars, and exporters would happily accept those dollars and convert them back to their own cash. The dollar was the middleman of trade, and it worked because it was reliable and everywhere. 

And that’s how the USD became the world’s favourite unofficial currency—available, secure, and always ready to party. 

So, what’s the fancy term for using USD on the down low? 

It’s called currency substitution—basically when a country ditches (or at least sidelines) its own money in favour of a more stable foreign currency, like the USD. This can happen in two ways: de facto dollarisation (unofficial, but everyone’s doing it) or de jure dollarisation (officially embraced by the government). 

If a country decides to go all in, they can peg their currency to the dollar, use both their own money and USD, or just fully switch over.  

But there’s a catch—once you dollarize, you lose the power to print your own money, which means you need a hefty stash of USD to keep things running smoothly. 

Why do countries use the USD unofficially? 

Let’s break it down, shall we? Countries use the US dollar unofficially for all sorts of reasons, and it’s not just because it looks pretty green. Here’s the lowdown: 

• Everyday transactions: Imagine buying groceries or paying bills with a currency that doesn’t suddenly decide to lose half its value overnight. That’s the USD for you—reliable and drama-free. 
  
  

• Savings and investments: People stash USD in their banks or under their mattresses because it’s like the financial equivalent of a cozy blanket. It’s stable, and it doesn’t freak out when the economy gets shaky. 
  
  

• International trade settlements: Businesses love using USD to deal with global partners because it’s like speaking a universal language. No awkward currency conversions, just smooth sailing. 
  
  

• Economic stability: When inflation or currency devaluation hits, the USD becomes the superhero of the financial world. It’s the haven everyone runs to when things go sideways. 
  
  

• Accessibility: The USD is everywhere. It’s like the Wi-Fi of currencies—widely available and accepted, no matter where you are. 
  
  

• Trade and tourism: Whether it’s international commerce or travel, the USD is the MVP. Tourists love it, businesses love it, and even locals love it. 
  
  

• Historical ties: Some countries have a long history with the US or dollar-backed systems, so using the USD feels like second nature. 

How does this play out in real life? Let’s get relatable! 

Picture this: In the US, if $2 buys you a cheeseburger today, it’ll probably buy you the same cheeseburger tomorrow. No surprises, no stress.  

But in some countries, the local currency is like a rollercoaster. One day, that cheeseburger costs $5, the next day it’s $200, and then suddenly it’s $100. Businesses and consumers are left playing a guessing game, like, “Should I sell this burger for $100 just in case the currency tanks tomorrow?” It’s exhausting! 

And that’s where the USD comes in. Its stability means product prices stay consistent, eliminating the need for constant adjustments. 

Countries known for unofficial USD usage 

Let’s talk about some iconic countries that unofficially use the USD. Sure, there are more out there, but these ones? They’ve got stories to tell. Think a wild mix of historical chaos, economic twists, and some questionable decisions, all coming together like the plot of a blockbuster movie. 

And hey, maybe there are some lessons to be learned along the way. Let’s dive in! 

Zimbabwe 

Let’s talk about Zimbabwe, a country that ended up relying heavily on the USD after its local currency completely collapsed due to hyperinflation. But how did that mess even start? Well, Zimbabwe is a textbook example of how poor governance and corruption can bring a country to its knees. 

Here’s what happened: The President and his cronies decided to take productive assets—mostly in agriculture—away from the people who actually knew how to run them. Instead, they handed those assets over to their political buddies, who had zero experience in production. Basically, they slashed the supply of goods. As a result, tons of people lost their jobs, and the whole country got a lot poorer. 

To try and make up for the shrinking economy, the government started printing loads of new money, squeezing every last bit of value out of what was left. But even that wasn’t enough to restore people’s living standards. Prices shot up because there was now way more money chasing way fewer goods. And what did the government do in response? They printed even more money, which just made prices rise even higher. It was a vicious cycle—rinse and repeat. 

The lack of trust in the government made things worse. Why would any entrepreneur invest in rebuilding production when they knew the government could just swoop in and take everything away again? Nobody wanted to take that risk. 

Eventually, people lost all faith in their local currency. They didn’t believe it could hold value or be used to buy goods internationally. So, what did they do? They ditched the Zimbabwe dollar altogether and started using USD instead. And that’s how Zimbabwe ended up leaning on the US dollar to keep its economy afloat.  

Argentina 

So, in 2023, Argentina was hit hard by a massive economic crisis, with inflation skyrocketing to a jaw-dropping 211%. A big part of the problem? The previous Peronist government, led by Economy Minister Sergio Massa, was printing money like there was no tomorrow. And this wasn’t just a one-time thing—Argentina’s inflation has been a long-term issue, thanks to decades of overspending by the government. Since they couldn’t borrow much and taxes were already high, they just kept printing more money, which, surprise, made things worse. 

Now, hyperinflation—it’s like watching an economy slowly spiral to its death. From the outside, things might seem normal: the lights are on, shops are open, and salaries get adjusted. But behind the scenes, people lose faith in their currency. Remember that cheeseburger example we talked about? Well, imagine businesses trying to price their cheeseburgers when the value of money is all over the place. They can’t plan, they can’t invest, and eventually, they start cutting costs and jobs. The result? Economic stagnation, fewer jobs, crumbling infrastructure, and public services going downhill. For regular folks, it’s a nightmare—prices keep climbing, but you still need to eat and live, so you end up spending everything just to get by. 

Enter Javier Milei. When his administration took over, they made fiscal balance a top priority. They stopped printing money, reduced government intervention, and cut public debt, which helped avoid full-blown hyperinflation. Sure, the peso is slowly stabilising, but here’s the kicker: even now, most vendors in Argentina still prefer USD over the local currency. Go figure! 

Cambodia 

Let’s first dive into Cambodia’s history—and trust us, it’s way more than just the Pol Pot regime and the genocide (though that’s definitely the part most people remember). The story of how Cambodia ended up using the USD is a rollercoaster of political chaos, instability, and a whole lot of “why does this keep happening?” 

So, after gaining independence, Cambodia was basically propped up by foreign aid from big players like France, the US, the USSR, and China during the 1950s and 1960s. For a while, things looked kind of promising—infrastructure got better, industries grew, and education improved. But by 1966, the economy hit a wall. Unemployment spiked, people got fed up, and boom—Prince Sihanouk was overthrown in 1970. What followed? A brutal five-year civil war, complete with massive bombing campaigns and widespread destruction, especially in rural areas. 

Just when you think it can’t get worse, enter the Khmer Rouge. These guys took over in 1975 and turned Cambodia into a nightmare. Mass deaths from overwork, disease, starvation, and executions became the norm. Their reign of terror ended in 1979 when Vietnam invaded, but that just caused more chaos—food shortages, a refugee crisis, and hundreds of thousands fleeing to Thailand. To make matters worse, the West slapped an embargo on the new People’s Republic of Kampuchea, which basically meant more suffering for everyone. 

Fast forward to 1991: the Paris Peace Agreement and UN intervention tried to bring some stability, but the Khmer Rouge wasn’t done yet. They kept fighting, causing more violence, kidnappings, and murders well into the mid-1990s. It wasn’t until 1999 that the war against the Khmer Rouge finally ended, opening the door for some much-needed investment and recovery. 

Now, with all this political unrest, you can imagine what happened to Cambodia’s monetary system. Spoiler: it got wrecked. Repeatedly. The country does have its own currency, the Riel, but it’s been unstable for decades. So why did Cambodia end up using USD instead of, say, Vietnamese Dong or Thai Baht? Well, in the early 1990s, foreign troops and a flood of USD into the country basically cemented the dollar as the go-to currency. It was stable, reliable, and everyone trusted it way more than the Riel. And that’s how Cambodia became a dollarised economy. Wild, right? 

Lebanon 

So, the Lebanese pound used to be pegged at a cozy 1,500 LBP to 1 USD. Fast forward to 2024, and the unofficial exchange rate is now a jaw-dropping 90,000 LBP per USD. Yeah, you read that right. The LBD basically did a swan dive off a cliff. 

But here’s the kicker: Lebanon’s hyperinflation isn’t just about money printing or bad policies. Nope, it’s a perfect storm of import dependency, corruption, and endless costs. Let’s break it down. 

First off, Lebanon produces almost nothing locally. Like, barely anything. That means most goods have to be imported, which is already expensive. But without bulk purchasing power? Prices go through the roof. And then there’s corruption—oh, the corruption. It jacks up business costs and cripples infrastructure development. Take electricity, for example. The public power system is a mess, so everyone relies on expensive private generators. More costs, more problems. 

And it doesn’t stop there. High public debt, a clunky tax system, and some seriously risky financial decisions (looking at you, high-interest Eurobonds) have pushed the economy to the brink. It’s like a never-ending cycle of “oh no, here’s another bill.” 

Now, there’s a tiny silver lining: high import costs are slowly encouraging local production. But let’s be real—Lebanon’s recovery options are tough. They could go full dollarisation or set up a currency board, but that would mean giving up control over monetary policy and enforcing strict fiscal discipline. And with corruption and mismanagement still running rampant? Yeah, good luck with that. 

So, what’s the way out? Fix the electricity shortages, clean up financial transparency, and reduce reliance on imports. Easier said than done, but hey, Lebanon’s got no choice if it wants long-term stability. But until then, USD is still the preferred currency in the country. 

Venezuela 

Alright, let’s talk about Venezuela—a story that’s kind of like Zimbabwe’s, but with a twist: oil. You’d think, “Hey, oil money is great money! The world runs on oil, so how could they mess this up?”  Well, buckle up, because Venezuela’s economic collapse is a wild ride of mismanagement, bad decisions, and a whole lot of “what were they thinking?” 

So, here’s the deal: Venezuela’s economy was all about oil. Like, all about it. And while that might sound like a golden ticket, it’s also a risky game. Unlike, say, Norway, which smartly reinvests its oil profits into other sectors, Venezuela put all its eggs in one oily basket. And when that basket started to crack, well… things got ugly. 

Enter Hugo Chávez. When he came to power, he rolled out a bunch of socialist policies—nationalising industries, slapping on price controls, redistributing land, you name it. For a while, it worked… kind of. Thanks to sky-high oil prices after 9/11, he had the cash to fund all these programmes. But here’s the kicker: when oil prices eventually crashed, Venezuela had zero backup plan. Like, none. 

Oh, and it gets worse. Chávez nationalissed the oil industry, which sounds great in theory, but in practice? Not so much. Running an oil industry takes constant reinvestment and maintenance, and Venezuela… well, they kind of dropped the ball on that. Instead of keeping experienced oil workers, they replaced them with political loyalists. Spoiler alert: that didn’t go well. Infrastructure crumbled, oil production tanked, and the money dried up. 

Meanwhile, Venezuela had almost no local food production, and those price controls? They killed businesses, leading to insane shortages. By the time Nicolás Maduro took over, the economy was in freefall. Hyperinflation hit, people were starving, and millions fled the country, creating one of the biggest refugee crises in the Americas. 

Fast forward to today, and Venezuela’s only shot at reviving its oil industry is foreign investment. But here’s the problem: after years of nationalising stuff and being hostile to private businesses, who in their right mind would want to take that risk? So yeah, Venezuela’s story is a cautionary tale of what happens when you put all your faith in one resource and then… well, mess it all up. Fun times, right? 

Keeping control of your money: Why most countries stick to their own currency 

Most countries like to be in charge of their money. Why? Because controlling how cash moves through the economy—via bank lending rates, bonds, and other fancy financial tools—helps them influence its value and keep things stable. 

Sure, unofficial dollarissation (using USD without formal permission) keeps economies running, but it’s not all sunshine and rainbows. Countries don’t exactly ask the US for permission to use its money—they just do it. Zimbabwe? They definitely didn’t ask. But in doing so, they also gave up control over their own economy. 

Here’s the catch: If the US makes a weird move with the dollar, Zimbabwe just has to roll with it. They can’t print more USD, they can’t tweak interest rates, and they definitely can’t issue US bonds like the US Treasury does. When the US needs more dollars, they simply fire up the money printer. Zimbabwe? They actually have to earn them. 

And let’s not even talk about the doomsday scenario—if the US magically vanished overnight and the dollar became worthless, every country depending on it would be in economic apocalypse mode. Not fun. 

At the end of the day, Zimbabwe (and other unofficial USD users) have zero control over the currency they depend on. The US Federal Reserve calls the shots—setting interest rates, adjusting inflation, and deciding how much the dollar is worth. While this removes the risk of local political drama crashing their currency, it also means Zimbabwe has no say in its own financial fate. Most countries prefer control over stability, but not everyone plays by the same rules. 

And let’s not forget that countries and businesses need foreign currencies for trade and investment. Exchange rates can make or break economies overnight. Zimbabwe uses the USD to dodge some of that chaos, but it comes at a price: 

• Total dependency on US monetary policy—they have no say in inflation or interest rates. 
  
  

• Loss of monetary sovereignty—they can’t manage their own currency. 
  
  

• Economic inequality—not everyone has easy access to US dollars, making the wealth gap worse. 

At the end of the day, using someone else’s currency is like borrowing your friend’s car. It’s great—until they take the keys back or crash it. Then? You’re out of luck. 

Before you go… 

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