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What Currency Does Panama City Use?

October 4, 2023

The national currency of the Republic of Panama is the Panamanian Balboa (PAB), which circulates alongside the U.S. dollar (USD), with which it is pegged at par. Balboas are only minted as coins, and each coin is divisible into 100 centésimos.

Vasco Nez de Balboa, a Spanish adventurer and conquistador who established the first European settlement in Panama in 1510 is honored by the coin's name.

Learning about the Panamanian Balboa

Following Panama's independence from Colombia, the Panamanian balboa was initially launched in 1904, taking the place of the Colombian peso.

With liberation came the release of new silver coins with face values of 2, 5, 10, 25, and 50 centimo. Later coins included ones that were one-tenth, one-fourth, one-half, one-and-a-quarter, and one centimo in size and with a metallic composition similar to American coins.

To commemorate key events in Panama's history, commemorative coins in the values of 5, 10, 20, 50, 75, 100, 150, 200, and 500 balboas have occasionally been struck.

The Panamanian balboa has always had a par exchange rate with the US dollar. Starting with the opening of the Panama Canal in 1904, there has been a sizable American military and political presence in the region, which has had an impact on the currency.

"Arias" Balboa Banknotes for Seven Days

President Dr. Arnulfo Arias of Panama enacted Article 156 of the Constitution in 1941. The Central Bank of Issue of the Republic of Panama, also known as El Banco Central de Emisión de la Repblica de Panamá, was established as a result of this article's authorization for both public and private banks to issue private currency Balboa banknotes.

Arias was succeeded by Ricardo Adolfo de la Guardia Arango during a military coup seven days later. The 2.7 million notes that had been issued up to that point were all ordered to be burned by the new administration, which also immediately shuttered the bank. The so-called "Seven Days' Notes" (also known as "Arias issues") are expensive collector's items even today because there are so few of these banknotes left in existence.

Although the economy of the Republic of Panama has grown recently, money is still distributed inequitably. The Panama Canal was updated and expanded, and it officially opened in 2016. The Canal still contributes significantly to the nation's revenue. Panama's gross domestic product (GDP) increased by 3% annually in 2019, according to figures from the World Bank, with almost any inflation.

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