QUITO, Ecuador - The heels of two guards clicked on the waxed floor of Ecuador's National Treasury building as they pushed a carload of currency toward a glass-plated room labled "Destruction."

Inside, the guards piled thousands of 50,000 - sucre notes -- each bill worth no more than $2 after a 244 percent devaluation here over the past 12 months -- onto the platform of a huge shredding machine. A conveyor belt hummed to life, rolling the bills toward their destiny with the machine's steely mouth and, ultimately, the trash dump.

"I certainly hope this dollar of yours is everything they say it is," one guard later whispered so he would not be heard by his boss. "It better be."

The shredding is part of a national leap of faith called dollarization. Ecuador is betting that adopting the U.S. dollar as its currency will help end an economic free fall that has led this poverty-stricken South American nation to the worst recession in a generation.

Some here -- particularly in the government -- view dollarization as Ecuador's last chance to avoid falling into economic chaos. But as the switchover begins, with businesses now accepting either dollars or sucres in a six-month transition, public opinion polls show many Ecuadorans are skeptical. Their doubts are shared by some economists, who say the dollar has been oversold as a cure for Ecuador's economic ills.

Even as large-denomination sucres are being shredded and hauled to trash dumps, support for dollarization has fallen to 38 percent, compared with 45 percent in February, opinion polls show. Only 21 percent of Ecuadorans surveyed said they will be better off being paid in dollars rather then sucres.

"I think people are realizing that this is not going to be a quick cure as some advocates of dollarization have promised," said one high-ranking economist with a major international lending institution. "the idea was definitely oversold, and people in Ecuador are now realizing that."

Ecuador is the first Latin American country to adopt the dollar since Panama in 1903, turning this nation of 12.4 million into a guinea pig for a fashionable but controversial economic theory. Ecuador leaders and some economists promise that adopting the dollar, along with privatizing state-run industries and adding flexibility to rigid labor laws, will bring monetary stability, reduced poverty, low inflation and renewed economic growth.

To that effect, Ecuador has adopted painful restraints meant to modernize its economy and pave the way for the dollar in everything from banking transactions to shopping at the supermarket. The nation has launched a six-month program to ease out the local currency and replace it with the greenback for good. Grocery stores and other shops have begun posting prices in dollars next to the cost in sucres.

The world is watching closely, because Ecuador is doing far more than adopting the dollar. By opening its market to foreign ownership and increased competition, it is also taking steps toward a free-market economy. Progress or setbacks here, analysts said, will likely influence other nations with troubled currencies that are also thinking about trading in their national coins for the dollar.

"If dollarization can work here," asserted Miguel Davila, the Central Bank general manager, "it can work anywhere."

But obstacles abound. In a nation with a poverty rate of 78.5 percent, a sizeable minority earns the equivalent of less than $1 a day. With the conversion rate at 25,000 sucres to the dollar, the weight of all those sucre bills somehow does not equal the one lonely George Washington. Some Ecuadorans, especially in isolated Amazon towns reachable only with a canoe and a large can of Deep Woods Off!, have never even seen a greenback and do not fully grasp the concept of a currency switch.

But most opposition lies in the worried faces of people such as Beatriz Tipan, 42, whose husband is a university professor paid the equivalent of $70 a month in sucres. In a nation where gasoline costs 20 cents a gallon in sucres and a plate of garlic shrimp goes for the equivalent of $1.50, Tipan, like so many other Ecuadorans, fears that new prices in dollars will put many goods and services beyond their reach.

Despite a government edict to give $20 raises to employees when salaries are dollarized in the coming weeks, Tipan's husband has been told he will only get a boost of $10 dollars, or 14 percent. That will not come close to matching inflation, which is expected to exceed 60 percent this year despite the currency switch.

"The problem," she said, fumbling with dollars and sucres in a grocery store, "is that we're a poor country with a rich country's currency. How are we expected to survive?"

Economists say prices will rise for several reasons. To make dollarization work, the government has vowed to curb subsidies that have made goods such as gasoline, natural gas, water and electricity artificially cheap. But analysts also say the cost of exportable goods -- timber, for instance -- may also gradually rise as companies begin to restructure their local prices to bring them closer to international rates.

"There is no question that salaries won't keep pace with prices," said Maria de la Paz Vela, an economist in Quito. "And in the short run, it can only mean more poverty."

At the same time, people such as Nora Vasquez, owner of a Quito-based textile company, worry about cheap imports hurting their businesses. In a few weeks, Vasquez will need to begin paying her employees in dollars, but the economy is so weak that she has largely been unable to raise prices. She said her higher labor costs will make Peruvian-made clothing cheaper because of that nation's weaker currency -- and she fears she will have to lay off some of her 25 employees.

Economists say dollarization could bring a wave of failed, uncompetitive businesses and higher unemployment rates, as happened when Argentina adopted an exchange rate of 1 peso to 1 dollar in the early 1990s. But analysts say the Darwinian economic policies will be good for Ecuador in the long run, leaving it with competitive industries and preventing the government from printing currency to meet economic problems in a politically palatable -- but disastrous way.

Proponents argue that the use of the dollar will prevent a repeat of devaluations that have already dropped the value of the minimum wage in Ecuador from $102 last year to $49 today. They add that the prices of many goods poor people consume, such as home-grown produce, are unlikely to rise dramatically, if at all.

"Look, this is something that in the short term is going to have social and political costs." Foreign Minister Heinz Moeller said. "But we had to do it for our children, our children's children.... We are putting ourselves in a straitjacket to impose [fiscal] disipline. We have been undisciplined. And [with dollarization] that will change."

The easy part is the logistics. Ecuador is cashing in most of its international reserves, including certificates of deposit and U.S. Treasury bills. During the past several weeks, the government has chartered two flights from Miami to Quito carrying a total of $110 million from First Union Bank with more on the way. The money has been carted into vaults at the Central Bankunder cover of roof snipers and heavy military guard.

Ecuador, which must keep the sucre alive in some form according to its constitution, will pay a private firm to mint "sucre" coins in denominations equal to U.S. coins. They will be the same sizes and colors as the penny, nickel, dine, quarter and half dollar.

Ecuador will need to cash in most of its foreign reserves to finance the switch, leaving only about $150 million in cash to defend against another economic crisis. Analysts agree that for dollarization to work, it is critical that the International Monetary Fund approve a $300 million loan, for which a letter of intent was signed Tuesday. That would open the door to $1.7 billion of additional financing from the World Bank and the Inter-American Development Bank, among other lenders.

Yet even with the cash infusion, Ecuador will have lost its ability to regulare its own monetary policy -- something seen as a benefit and a disadvantage. On the plus side, it removes power from the Central Bank, which has proven itself incapable of handling monetary policy. But it also means that Ecuador will have little recorse if another crisis hits.

Ecuador has fallen into this economic pit for a multitude of reasons including official corruption, a massive banking crisis, crop failures from the weather pattern caused by the El Nino phenomenon, and a drop last year in key commodity prices. If those problems persist or worsen, Ecuador's inability to attempt controlled devaluation to stimulate the economy could mean higher unemployment, the inability to cover government payrolls as well as trouble making payments on its $15 billion foreign debt.

The last time the going got tough -- in January, when then - President Jamil Mahuad first announced dollarization in a bid to save his job - a left-leaning faction of Indian leaders and the military overthrew him. After heavy pressure from the United States, coup leaders backed down and turned over the presidential sash to Vice President Gustavo Noboa.

"I would not rule out" another government overthrow, said Ricardo Ulcuango, a board director of the Confederation of Ecuadoran Indigenous Nationalities, which helped lead the January coup. "But for now, we're watching to see how things go.