The answer is simple: the Balboa. However, for over a century the dollar has been the legal currency in the country and one that has contributed to the transformation of Panama into one of the safest hubs for international business in the region.
Unlike other countries such as Ecuador, El Salvador and at one point Peru and Argentina, Panama has a long standing history with the United States dollar. This tradition has allowed the country to develop an economic stability that differs from the rest of the region.
The use of the dollar as the legal currency has allowed the country to develop a bank district that is recognized worldwide, providing stability in transactions and also developing credit points at better payment plans without the risk of devaluation.
Incidentally it allows a sustained low inflation rate, which generates optimal conditions to reach a high developmental level and become one of the most attractive economies for foreign investment.
This recognition is given by three main entities in world risk management: S&P, Fitch and Moody’s. All have ranked the country with an investment qualification of BBB+, BBB and BAA respectively placing the country at the same level as Chile, Mexico, Peru, Uruguay, Colombia and above the rest of Central America.
Therefore, if you are interested in using Panama as your headquarters for business, keep in mind that the dollar is the official currency. If on the other hand you are a tourist, do not be surprised when you pay in cash and the change your receive is a combination of American coins and local coins such as the ‘Martinelli’ (named after a former president who decided to value the coin as one dollar) or the ‘cuara’ (the traditional American quarter or 25 cents).
