Over four decades, Steve Hanke has pursued a global effort to tame hyperinflation, which has repeatedly devastated developing countries. His prescription is to tie national currencies to the U.S. dollar so governments can no longer flood economies with pesos, sucres or other weak money to finance overspending, leaving citizens to absorb the cost through soaring rent, medicine and grocery bills that outpace incomes.

That approach — whether through full dollarization or Hong Kong-style currency boards that fix a currency to the greenback — has made Hanke, a professor of applied economics at Johns Hopkins University, a globe-trotting “Money Doctor.”

Now, Hanke says he is making the most important house call of his career. Venezuela’s National Assembly has named him Special Adviser on Economic, Monetary, and Energy Affairs, assigning him to help address hyperinflation running at an annual pace of 400%, the worst in the world, as the country attempts to rebuild after the ouster of Nicolas Maduro. Hanke’s solution is a full dollarization law that would abolish the bolivar and shut down the central bank. He told Fortune he estimates the odds of passage at 50% to 80%, which he described as Venezuela’s best chance for sound money in three decades.

The currency debate is tied closely to Venezuela’s oil economy. The country of 29 million has what Hanke describes as Latin America’s greatest underground wealth, with the world’s largest crude reserves and substantial mineral deposits ranging from copper to lithium. It also retains a sophisticated professional class, while millions of exiles stand ready to return and help rebuild the country.

Hanke said that return will not happen until the oil sector recovers. Venezuela is producing just 1.1 million barrels per day, about 1.3% of global output and roughly one-third of the 3.4 million barrels per day it produced before the Chavez era in 1998. He said that level is only a little more than 7% above the output level before Maduro’s exit, falling short of what the administration expected after the U.S. Special Forces raid on January 3 that removed Maduro.

“Stability isn’t everything, but without stability, which means stable prices, you have nothing,” Hanke told Fortune. “There’s no better case study showing that’s true than Venezuela.”

He argues that higher oil output is essential to restructuring Venezuela’s roughly $250 billion debt burden, equal to about 150% of GDP, the highest figure in Latin America and the fourth-highest in the world. Venezuela had been sending crude to China under a repayment arrangement tied to as much as $15 billion in loans from Beijing.

Foreign investors remain cautious. The U.S. and other international companies that could help restart the sector have stayed on the sidelines, worried about expropriations similar to those carried out under Maduro and Hugo Chavez. The government led by President Delcy Rodriguez has so far not passed laws that would adequately protect private property rights, a prerequisite for large-scale overseas investment.

U.S. oil majors are now buying Venezuelan crude, which was shipped mostly to China only a year ago, for Gulf Coast refineries designed to process heavy crude. But none has committed capital to restoring the country’s deteriorated petroleum infrastructure, even though the Trump Administration is effectively now the decision-maker for PDVSA, the state oil company. Exxon Mobil CEO Darren Woods has said Venezuela will not “uphold the sanctity of contracts” and has criticized its record of “steal[ing] investments,” calling the country “uninvestible.”

In Hanke’s view, Venezuela is facing the largest lender-borrower workout in history. Oil accounts for as much as 98% of the nation’s exports, meaning petroleum production would generate virtually all of the dollars needed to service debt. The faster Venezuela brings in petrodollars, Hanke said, the better the terms it is likely to receive from creditors including the governments of Russia and China, distressed-debt hedge funds, ConocoPhillips and Exxon Mobil.

Hanke said prices measured in bolivars are currently rising at a 400% annual rate, down from 700% before Maduro’s capture but still far above Iran and the highest in the world. He described that as an 8% weekly increase in prices for eggs, beef and rent, while electricity bills, salaries and taxes also move higher, crushing purchasing power and company profits.

The inflation problem and the oil collapse reinforce one another, Hanke said. “When oil revenues dried up because the government let the infrastructure fall apart, it paid its bills, including paying government employees and pensioners, by printing money,” he said. He noted that the practice continues after Maduro’s departure. His goal is to eliminate it entirely.

Hanke has drafted a dollarization law that would replace the bolivar with the world’s reserve currency and close the central bank, ending the government’s power to create money and manipulate interest rates. He is working on the project with Antonio Ecarri, 52, an Assembly member, former presidential candidate and founder of the centrist Pencil Alliance party.

A second shot at the dragon

This is Hanke’s second attempt to tackle hyperinflation in Venezuela. In 1995 and 1996, while serving as chief economic adviser to President Rafael Caldera, he designed a currency-board blueprint. That proposal failed to win a majority in the National Assembly.

This time, Hanke says the political environment is more favorable. He points to surveys showing that most Venezuelans want to abandon the bolivar and use the dollar. He estimates the chances of the bill passing the Assembly and becoming law at 50% to 80%.

The idea may sound ambitious, but Hanke says the facts already on the ground point in that direction. If they are not paid in bolivars, Venezuelan shoppers are already buying nearly everything in dollars, and the Trump Administration appears comfortable with the U.S. currency’s de facto spread.

“It would be the biggest switch from domestic currencies to an alternative since the introduction of the Euro in 1999,” Hanke said. He also argues that dollarization would impose useful discipline by preventing governments from weakening their currency under the “phony” claim that devaluation improves competitiveness. If that were true, he said, “Venezuela would be the most competitive economy in the world. The bolivar has lost 78% of its value to the U.S. dollar in the past year.”

Still, political leaders who have campaigned on dollarization have often backed away once in office. Hanke pointed to Argentina, where President Javier Milei ran in 2023 on a peso-to-greenback platform but abandoned the plan in favor of conservative monetary and fiscal policy that cut inflation somewhat. Prices in Argentina, however, are still rising at more than 30% a year, and the issue remains a political burden for Milei.

Dollarization also comes with trade-offs. A country gives up the power to print money, along with seignorage, the revenue earned from issuing currency, and the ability to act as lender of last resort to its banking system. Dollarization is also harder to reverse than a currency board, which Hanke sees as an advantage. In his view, the cost is worth paying when inflation reaches, or comes close to, the world’s worst levels.

Hanke said dollarization would quickly revitalize Venezuela’s economy. He predicts the shift would unleash “animal spirits,” push the country from negative to positive growth, and draw large-scale foreign investment into oil and even the country’s unreliable electrical infrastructure, which suffers daily blackouts. He said debt negotiations would also move faster because rising oil exports would improve creditors’ expectations of repayment.

Consumer lending is nearly nonexistent in Venezuela, and no one can obtain a mortgage in bolivars. Hanke said lower rates under dollarization would create a credit market almost from scratch, encouraging business investment and reviving housing.

Venezuela would be Hanke’s largest dollarization project yet in a nearly 50-year career that has made him one of the most prominent advocates of hard-currency systems.

He said governments seek him out because of the results of earlier dollarizations and currency boards, not because of his pitch. Hanke clarified that his use of the term “dollarization” refers to any move from a weak local currency to a major, stable one, not only the U.S. dollar.

“The bottom line is that the leaders in these countries know who the Money Doctor is,” he said. “And they know what works. I never offer my services, the best way to do it is not to peddle. Waiting for the call is how you make sure the government is really serious about getting it done.” He said he works pro bono and pays his own way, which gives him the freedom to make his own recommendations.

A series of inflation battles

Hanke said he welcomes the challenge. Converting Venezuela to the dollar would be his biggest victory after decades of battling inflation around the world. He said his record shows that where governments maintain the commitment, inflation largely disappears; where they do not, hard-currency arrangements eventually weaken.

He has been involved in three of the four cases in the last quarter-century in which a state shifted from hyperinflation to a hard currency after World War II.

The first was Montenegro. In 1999, while serving as a cabinet member, Hanke persuaded the country to abandon the hyperinflating Yugoslav dinar for the Deutschemark. He said Yugoslav strongman Slobodan Milosevic once spread rumors that he was a French spy and sent a hit squad to kill him. Montenegro remains a hard-currency economy; after the euro replaced the Deutschemark, it became the legal tender.

Hanke then turned to Ecuador. In 2000, as an adviser to the finance minister, he oversaw the country’s transition from the sucre to the dollar. It was the first dollarization in Latin America since Panama a century earlier, and El Salvador followed a year later. Ecuador has since recorded one of the world’s lowest inflation rates, though critics argue that it lost the ability to devalue and ceded market share in cut-flower exports to Colombia.

In 2009, Hanke became an informal adviser to Zimbabwe’s new prime minister, Morgan Tsvangirai, in a National Unity government that included the opposition under dictator Robert Mugabe. Hanke said he avoided an official role because of the danger to foreigners.

The situation resembled Venezuela’s in one respect: citizens largely refused to use the Zimbabwe dollar. The government initially allowed people to use U.S. dollars instead, and the greenback effectively took over. Zimbabwe officially dollarized in 2009, and, as Hanke put it, “Inflation virtually disappeared.” When the National Unity Government collapsed in 2013, dollarization ended and triple-digit inflation returned, showing that such stability depends on political support.

Before those dollarizations, Hanke helped establish several currency boards, under which inflation-hit countries keep their local currencies but peg them to the dollar or euro at a fixed rate while holding reserves equal to the money in circulation. People and businesses can exchange local money for the anchor currency at any time.

In 1991, Hanke advised Argentine President Carlos Menem to adopt a currency board, but Menem chose a weaker convertibility system that still allowed the country to prosper for years. In 1995, Menem asked Hanke to draft a dollarization law, but it never advanced. The convertibility system later collapsed in 2001, and the peso surged, which Hanke said showed that dollarization addresses the symptom rather than the underlying problem.

Four years later, Hanke drew controversy, and the hostility of the Clinton administration, after taking up a request from Indonesia’s President Suharto. Hanke said he met Suharto nightly in a small den at the president’s private residence to design a stable rupiah. But, according to Hanke, President Clinton wanted Suharto removed from power and feared sound money could keep him there. He said the Clinton administration threatened to withhold billions in aid to kill the plan, and the weak rupiah helped speed Suharto’s exit months later.

Hanke also helped design or advise currency boards in Estonia, Lithuania, Bulgaria and Bosnia, all of which still anchor to the euro. He pushed similar plans in Kazakhstan, but those stalled because of opposition from Moscow. He said Moscow preferred a weak, unstable tenge.

His career has included plenty of dramatic moments, including a visit to Albania where he was greeted by a deputy prime minister wearing a revolver and standing in front of a picture of Mother Teresa. That country’s currency-board plan did not go forward.

Hanke’s path began in rural Iowa, where he worked on his grandfather’s egg operation and became fascinated by the practice of selling supplies forward on the Chicago Mercantile Exchange. He opened a CME account and began trading soybeans at age 14. By the 1980s, he was chief economist at Friedberg Mercantile in Toronto and advised a large short position in crude oil, betting that Saudi Arabia would punish OPEC members for violating production quotas. Oil prices later fell from $30 to under $10.

‘Pump to the max, baby’

Hanke’s current thinking on Venezuela draws from an idea he developed while serving on the UAE’s financial advisory council from 2008 to 2014. He said he concluded that the federation would create the most wealth for its people by producing as much oil as possible, a strategy he called “take the money and run.”

At the time, OPEC was limiting how much oil the UAE could sell. Hanke said the UAE repeatedly sought a higher quota and was repeatedly denied. He advised the country to leave OPEC, though it remained a reluctant member while accepting his view that the cap reduced the true value of its reserves.

On May 1, 2026, the UAE left OPEC after 59 years of membership. Hanke said he believes his analysis helped drive the decision. He said that unless oil prices rise sharply in real terms, waiting longer to produce reduces the present value of reserves. In his view, that was the logic behind the UAE’s exit. He also said the UAE has increased production by 80% in four months, from 600,000 to 1.1 million barrels per day, and is on track to generate an additional $15 billion in annualized revenue.

Hanke said Venezuelans are already abandoning the bolivar in a form of “spontaneous dollarization,” making an official shift more likely. His role also includes energy policy, and he is urging Venezuela to adopt a strategy he summarizes as “pump to the max, baby.”

He said Venezuela’s production target clashes with its extraordinarily low depletion rate, or the share of reserves produced each year. The country is extracting just 0.2% of its 380 billion barrels of reserves annually. At that pace, it would take 350 years to use up half the reserves underground. He said Venezuela’s depletion rate is one-fourth of Saudi Arabia’s 1.2% and one-third to one-fifth of Kuwait’s 1.5%. By contrast, Exxon Mobil and other major producers are estimated to have depletion rates in the 6% to 7% range, meaning they would use up half their reserves in about a decade.

“When you apply a discount rate to all the time it takes to get Venezuela’s oil out of the ground, the present value of a huge amount of their oil is effectively zero,” Hanke said. “At these anemic production rates, it’s amazing how little the world’s biggest deposits are worth.”

The reason for the gap, he said, is Venezuela’s dilapidated oil infrastructure. In his view, dollarization would draw major investment into the sector, and Caracas should then push for larger OPEC quotas as production capacity rises. If OPEC refuses, he said, Venezuela should follow the UAE’s example and leave the group to pump more oil.

Hanke argued that the UAE’s departure shows the value of a credible threat to exit OPEC in pursuit of higher output. He also said Venezuela would gain credibility because the same adviser who worked with the UAE is now advising Caracas.

He sees Venezuela becoming an oil producer that defies OPEC if necessary to maximize the value of its reserves.

One of the strongest signs, in Hanke’s view, that Venezuela is ready for the dollar is already visible: nearly everyone not employed by the government, or receiving state aid or pensions in bolivars, is using dollars. In 2019, the bolivar lost nearly all its value, forcing Maduro to allow full convertibility into dollars. Store prices are now posted in dollars, and transactions are made in cash or in dollar-backed stablecoins.

Hanke said the most popular stablecoin is USDT, known as Tether, which accounts for most remittances sent from abroad. He said Tether speeds the move toward the dollar because it can be converted into greenbacks.

The exception is the roughly 7 million public employees and pensioners paid in bolivars that lose about one-third of their value each month. Their incomes cannot keep up with food, medicine and rent. “That’s why they’re dumping their bolivars and getting dollars as fast as they can,” Hanke said. “And the constant crunch on a huge swath of the nation’s purchasing power is an enormous drag on the economy.”

Even so, Hanke said Venezuela is already far along in what he calls “spontaneous dollarization.” Francisco Zalles, the Ecuadorian economist who worked with Hanke on Ecuador’s dollarization and later co-authored a Spanish book on the topic, said: “The Venezuelans have already chosen the currency they want.”

For Hanke, the challenge is still formidable. But he said the fact that the currency he favors is already the public’s choice improves its chances of becoming official.