Panamá has a currency arrangement unlike any other in the world. The official currency of Panamá is the Balboa (B/). The Balboa has always been pegged at 1:1 to the US dollar. Further, not one Balboa note has ever been printed. Balboa denominated coins are minted in exactly the same size, shape and value as the US penny, nickel, dime, quarter and half- dollar. In practice, this means that the US dollar changes hands in Panamá as the local currency. In practice, Panamá has always been “dollarized” like the British Virgin Islands, the Turks & Caicos Islands, and more recently, El Salvador and Ecuador. Nevertheless, legally, Panamá’s currency is still the elusive Balboa.
Why does this matter? Because bank accounts in many Panamanian banks can be held in US dollars or Panamanian Balboas. Dollars and Balboas can be exchanged freely at no fee and without any discount. This anomaly allows one to safely hold their dollar reserves in Balboas. Unlike dollar accounts, Balboas cannot be summarily seized or frozen by US officials in an end-run around Panamá’s bank privacy laws. This is a technicality worth exploiting!
The amazing thing is that nobody seems to realize this until you point it out to them. They have been so busy promoting their dollarized status that they have overlooked this hugely important point. You can have all the utility of the dollar when you need it, and all of the safety of being in another currency when you need it: without paying any currency exchange costs.
Now comes the hard part—finding a Panamanian banker who A) understands this, and B) will do it for you. They are there, and we have found them. But they are few and far between.
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