#Nicaragua 🇳🇮 #APriori_Article: The Cordobization Policy in Nicaragua from a Legal Perspective

Legal Framework of Cordobization

The Organic Law of the Central Bank of Nicaragua (Law No. 732) establishes that the BCN is responsible for executing the Government’s monetary and exchange policy. Accordingly, the decision to implement the cordobization of the economy is based on Article 36 of said law, which provides that the córdoba is the only legal tender in the country (Central Bank of Nicaragua, 2025).

Additionally, the Law on the Protection of the Rights of Consumers and Users prohibits pricing in foreign currencies, which further strengthens the legality of the measure (National Assembly of Nicaragua, 2023). Consequently, commercial establishments and financial institutions are required to adapt their billing and payment systems to the exclusive use of córdobas.

Legal Implications of Cordobization

The implementation of cordobization raises several legal challenges:

1. Adaptation of Contracts and Financial Obligations:
   Contracts previously expressed in U.S. dollars must be adjusted to córdobas. This transition may lead to legal disputes regarding the applicable exchange rates and the conversion of monetary values under the new legal framework (García, 2024).
2. Impact on the Banking System:
   The obligation to conduct all payments in córdobas directly affects the operation of U.S. dollar accounts, potentially creating uncertainty among depositors and impacting the overall financial stability of the country (Central Bank of Nicaragua, 2025).
3. Compliance and Penalties:
   The regulation requires that businesses and financial institutions update their payment systems to process transactions exclusively in córdobas. Failure to comply with this requirement may result in administrative and financial penalties.

Penalties for Non-Compliance with Cordobization

Non-compliance with the cordobization policy may result in several penalties, including:

1. Administrative Fines:
   Businesses that continue charging in U.S. dollars may be penalized with fines proportional to the value of the transactions conducted in foreign currency (Central Bank of Nicaragua, 2025).
2. Temporary Business Closures:
   In cases of repeated violations, the authorities may impose temporary suspension of commercial activities on businesses that fail to adjust their billing systems to córdobas (National Assembly of Nicaragua, 2023).
3. Criminal Liability:
   Where non-compliance is deemed a serious violation of the national financial system, those responsible may face criminal proceedings for refusing to comply with monetary regulations or disrupting the economic order established by the Government (García, 2024).
4. Revocation of Business Licenses:
   Financial institutions and businesses that persist in conducting transactions in dollars may face the revocation of their operating licenses, particularly if there is evidence of an intentional effort to circumvent current regulations (Central Bank of Nicaragua, 2025).

While cordobization seeks to strengthen the national currency and reduce dependency on the U.S. dollar, its success will ultimately depend on the public’s trust in the córdoba and the country’s economic stability. From a legal perspective, this policy is supported by the current legislation; however, its implementation will require significant adjustments across the financial and commercial sectors to prevent legal and economic disputes.