Seven countries other than the United States use the U.S. dollar as their official currency. Most of them are Latin American countries or island nations with small populations.
The country that has used the U.S. dollar the longest is Panama, which adopted the balboa, pegged directly on a 1:1 to the dollar, as its currency in 1904. Since Panama does not print any balboas and has dollars circulating instead, the dollar is the official currency for most practical purposes. Panama does, however, use its own coins, which are near duplicates of U.S. coins except in the design. Both U.S. and Panamanian coins circulate freely throughout the country.
Other countries using the dollar are:
- Ecuador began using the dollar in 2000 after inflation made its currency, the sucre, worth very little. Ecuador uses its own coins, which are similar to U.S. coins in appearance but don’t necessarily have the same metallic content, side by side with U.S. coins.
- El Salvador adopted the dollar in 2001 in an attempt to control inflation.
- East Timor began using the dollar in 2000 when it was under the control of the U.N. Transitional Administration and has continued to do so since it became independent in 2002. It has its own coins, which do not mimic U.S. coins.
- The Federated States of Micronesia, population 108,000, was administered by the U.S. before it gained independence in 1986 and continues to have very close ties to the U.S. through a free-association compact.
- The Marshall Islands, population 65,000, was administered by the U.S. before it gained independence in 1986 and continues to have very close ties to the U.S. through a free-association compact.
- Palau, population 21,000, was administered by the U.S. before it gained independence in 1994 and has very close ties to the U.S. through a free-association compact.
Additionally, several other countries have a partially dollarized economy:
- The Bahamas‘ unit of currency is the Bahamian dollar, equal to $1 U.S. Within the country, especially at tourist centers, it is often used interchangeably with U.S. currency.
- The dollar of Belize has long been pegged to equal 50 cents U.S.
- The dollar of Bermuda has a fixed exchange rate of being equal to $1 U.S.
- In much of Cambodia, particularly in urban centers, the U.S. dollar is the de facto currency. Many people prefer it to the Cambodian riel.
- The Cayman Islands dollar has a fixed exchange rate, being equal to $1.20 U.S.
- Six small countries belonging to the Organisation of Eastern Caribbean States use their own dollar, which has been pegged to equal about 37 cents U.S.
- The Zimbabwe government effectively abandoned the hyperinflated Zimbabwe dollar in January 2009. Although it is still produced, virtually all goods are now priced in U.S. dollars. At the same time, the government declared the U.S. dollar, the South African rand and the Botswana pula to all be legal tender in Zimbabwe.
- In parts of Latin America, expensive imports such as cars and high-end electronics are often priced in dollars.
Need research? Quezi's researchers can answer your questions at uclue.com