The Panamanian Balboa (PAB) is Panama’s official currency, holding a unique place in the country’s financial system. Named after the explorer Vasco Núñez de Balboa, the PAB primarily exists in coin form and coexists with the US dollar, which Panama also accepts as legal tender. This article will explore the Panamanian Balboa (PAB), its history, denominations, and how its exchange rate and role in the economy function.

What is Panamanian Balboa (PAB)?  

The Panamanian Balboa, abbreviated as PAB, is the official legal tender of Panama’s official currencies. Since 1904, Panama has pegged the PAB at a 1:1 ratio with the United States dollar (USD), allowing both currencies to be used interchangeably. The Panamanian Balboa is unique because Panama does not issue paper bills for the Balboa; instead, USD bills circulate alongside Balboa coins. The government issues PAB coins in various denominations for everyday transactions.

The Panamanian economy has a dollarized system, which brings both stability and limitations to the country’s monetary policy. Because of its peg to the USD, the value of the Panamanian Balboa (PAB) is directly influenced by the performance of the US economy. This stable exchange rate helps Panama maintain low inflation rates, attracting foreign investments and making it an attractive destination for international businesses. However, Panama cannot control its own monetary policy, limiting its ability to respond to local economic issues independently.

History of Panamanian Balboa (PAB)  

Panama introduced the Panamanian Balboa in 1904, shortly after gaining independence from Colombia. Replacing the Colombian peso, Panama pegged the Balboa to the US dollar to support economic stability. Over the years, the Balboa has remained stable, with its value unchanged against the dollar. The historical stability of the PAB has allowed Panama to benefit from a reliable financial system, though it depends heavily on the strength of the USD.

Denominations of Panamanian Balboa (PAB)  

The Balboa is available in several coin denominations, including 1, 5, 10, 25, and 50 centésimos (cents), as well as a 1 Balboa coin. These coins are similar in size and value to US coins, making it easy for residents to use both currencies interchangeably. In recent years, larger denominations of the Balboa, such as the 2 Balboas coin, have been introduced for practical use.

Exchange Rate of Panamanian Balboa (PAB)  

Since its inception, Panama has fixed the exchange rate of the Panamanian Balboa at 1:1 with the US dollar. This fixed rate provides stability for Panama’s economy, allowing businesses and tourists to rely on consistent exchange values. The dollar peg means that Panama’s economic growth is closely tied to the US economy.Panama’s pegged currency can shield it from fluctuations but makes it vulnerable to USD shifts.

Economy of Panamanian Balboa (PAB)  

As a dollarised economy, Panama benefits from the stability of the USD, attracting foreign investments and promoting financial security.

PAB is the official currency of Panama, a Central American country with the symbol B/. One Balboa is divided into 100 centésimos, similar to cents in U.S. currency. Panama’s currency system is unique, with the Balboa (PAB) pegged to the U.S. dollar (USD) at a 1:1 rate since 1904. Panama issues Balboa coins in denominations matching U.S. coins but uses U.S. dollar bills for paper currency.