DEFINITION of 'SVC (El Salvador Colon)'
SVC is the currency abbreviation for the El Salvador colón, which was the official currency for El Salvador from 1892 to 2001; its symbol is a C with two slashes running through it. The El Salvador colón was made up of 100 centavos. On Jan. 1, 2001, the Monetary Integration Act, passed by the Legislative Assembly of El Salvador the year before, replaced the SVC with the U.S. dollar at a rate of 8.75 to 1.
BREAKING DOWN 'SVC (El Salvador Colon)'
In 1883, the First Monetary Law called for the adoption of the peso, divided into 10 reales, as the official currency of El Salvador. In 1892, the Legislative Assembly under President Carlos Ezeta changed the name of the currency from peso to colón in honor of Christopher Columbus, to commemorate the fourth centennial of the discovery of the Americas.
History of the Colón
Upon its adoption in 1892, the colón was pegged to the U.S. dollar at 2 colónes to 1 U.S. dollar. The El Salvador colón was taken on as the official currency of El Salvador in 1919 when it replaced the peso at par. At that time, the Second Monetary Law decreed that all cut, perforated and worn-out coins would be removed from circulation and no substitutions would qualify as legal tender. From 1919 to 1931, the colón remained pegged to the U.S. dollar at 2 to 1, but when the country left the gold standard in 1931, its value was allowed to freely float against other currencies.
On June 19, 1934, the Central Reserve Bank of El Salvador was created, and it acquired sole power to issue currency. On Aug. 31, 1934, it issued the first SVC banknotes in denominations of 1, 5, 10, 25 and 100 colónes. In 1955, the bank began to issue 2 colónes bills. In 1979, it initiated production of 50 colónes bills, and in 1997, it introduced 200 colónes bills. Coins were minted in denominations of 1, 2, 3, 5, 10, 25 and 50 centavos, and also in denominations of 1 and 5 colónes.
From its inception in 1934, the Central Reserve Bank of El Salvador was a private entity, but in 1961, the government took direct control. Following decades of economic turmoil, the Central Reserve Bank became autonomous in 1990.
Replacement of the Colón With the Dollar
In an effort to stabilize the economy, the Monetary Integration Act of 2001 created a fixed exchange rate between the colón and the dollar and took away the Central Reserve Bank's exclusive right to issue currency. The dollar became legal tender along with the colón. Because El Salvador is unable to print its own dollars, it instituted an educational program to help its citizens understand the value of the currency denominations. The colón has never officially been removed from circulation as legal tender.