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U.S. watching Ecuador dollarization plan--Summers

NEW YORK, Jan 12 (Reuters) - U.S. Treasury Secretary Lawrence Summers said on Wednesday the United States was closely watching Ecuador's plans to dollarize its economy, but he offered no further comment.

``Our perspective is to recognize the need for the establishment of strong fundamentals, no matter what a country's currency arrangements are, and to encourage Ecuador in its cooperation with the IMF,'' Summers said.

Ecuadorean President Jamil Mahuad announced plans on Sunday to scrap the nation's sucre currency in favor of the U.S. dollar, hoping to lift Ecuador's economy out of its worst crisis in decades.

The plan would legalize the dollar as the official currency and gradually take the sucre out of circulation in exchange for the greenback at 25,000 sucres to the dollar.