Panamanian Balboa (PAB)

The Panamanian Balboa (PAB) is the official currency of Panama. It is named after Vasco Núñez de Balboa, a Spanish explorer who discovered the Pacific Ocean. However, it is important to note that the Panamanian Balboa is not a separate currency from the United States dollar (USD).

Panama does not have its own central bank to issue currency, so it uses the United States dollar as its official currency. The Panamanian Balboa exists only as a unit of account and is used for bookkeeping purposes, while the physical currency in circulation is the United States dollar.

Since Panama does not have the authority to issue its own currency, the Panamanian government has an agreement with the United States to use the USD as legal tender. This arrangement has been in place since 1904, when the United States took over the construction of the Panama Canal.

In everyday transactions, both Panamanian Balboa and United States dollar banknotes and coins are used interchangeably. The denominations of the Panamanian Balboa banknotes are the same as those of the United States dollar, including 1, 5, 10, 20, 50, and 100. The coins are also the same, with denominations of 1, 5, 10, 25, and 50 cents, as well as 1 USD.

The exchange rate between the Panamanian Balboa and the United States dollar is fixed at 1:1. This means that one PAB is always equal to one USD. As a result, there is no fluctuation or exchange rate risk between the two currencies.

While the Panamanian Balboa is technically a separate unit of account, its practical use is limited. Most transactions in Panama are conducted in United States dollars, and the Panamanian Balboa is primarily used for accounting purposes.

In summary, the Panamanian Balboa (PAB) is the official unit of account in Panama, but it is not a separate currency from the United States dollar. Panama has an agreement with the United States to use the USD as legal tender, and the Panamanian Balboa exists only for bookkeeping purposes. Both currencies are used interchangeably in everyday transactions, with a fixed exchange rate of 1:1.