By Ochereome Ikenna
Did you know that not every country prints its own money? There are various reasons why some countries adopt another country’s currency: for stability, convenience or historical reasons.
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These countries often adopt stronger currencies from economic powerhouses like the US dollar or the euro to keep their economies stable. In this article, we’ll look at five countries that don’t have their own currency and why they opted for this approach.
1) Ecuador
The Ecuadorian currency between 1884 and 2000 was the sucre. The currency experienced a serious collapse and hyperinflation in the late 1990s, which led the Ecuadorian government to adopt a stronger, more stable currency (USD). The US dollar was able to stabilise the economy, control inflation and make trade easier.
2) Kosovo
The former currency for Kosovo was the Yugoslav dinar, but now they have adopted the euro to ensure economic stability and trade. After gaining independence from Serbia in 2008, the euro also helped eliminate the instability that came with using the Yugoslav dinar, especially because Kosovo’s economy depends heavily on trade from Europe.
3) Panama
Since Panama gained independence from Colombia in 1903, Panama adopted the US dollar for economic stability and global trade. The dollar has helped to facilitate business and reduce exchange risk. The balboa is still used as coin but is attached to the dollar. The balboa replaced the Colombian peso in 1904 following the country’s independence.
4) Montenegro
Montenegro started using a different currency in 1999 to escape the instability of the Yugoslav dinar. After using the German Deutsche Mark, they switched to the euro in 2002. Various factors motivated the switch to a different currency, like the need for monetary stability, easier trade with Europe, and boosting the economy. Tourism is another key reason for the switch because of the familiarity of the euro among European travellers.
5) El Salvador
El Salvador used the Salvadoran colón (SVC) from 1892 until 2001. El Salvador switched to a different currency for the following reasons: to stabilise the economy and control inflation, to reduce exchange rate risks for investors, and to attract foreign investment etc. El Salvador officially adopted the US dollar (USD) as legal tender under the Monetary Integration Law.
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