Madeira Escudo

AAA

DEFINITION of 'Madeira Escudo'

The former currency of Madeira, an island off the coast of Portugal. The Madeira escudo was used as Madeira's currency until it adopted the euro along with Portugal on January 1, 2002. Madeira belongs to Portugal, but has been an autonomous region since 1976, meaning that it has its own government and legislature and can make its own decisions on regional matters. It has Portugal's second highest GDP after Lisbon and is a popular EU tourist destination, perhaps best known for its fortified wine production. The escudo was also the former official currency of Portugal until the adoption of the euro.

INVESTOPEDIA EXPLAINS 'Madeira Escudo'

Madeira along with Portgual adopted the euro to help facilitate trade among EU countries, eliminating the uncertainties imposed by fluctuating exchange rates and the need to exchange currencies before completing a transaction.





The euro also prevents individual EU member countries from inflating their currencies to eliminate government debt (though the EU central bank still has that power). Critics have pointed out that widespread implementation of the euro decreases currency competition, giving people fewer options for holding their money in a different currency when faced with wealth-eroding monetary policies such as inflation. Others have pointed out that widespread use of the euro could be followed by tax harmonization policies that would decrease tax competition among member states and stifle economic growth.

RELATED TERMS
  1. New York Dollar

    The buying power of a U.S. dollar in the city of New York. The ...
  2. Monetary Policy

    The actions of a central bank, currency board or other regulatory ...
  3. European Central Bank - ECB

    The central bank responsible for the monetary system of the European ...
  4. Euro

    The official currency of the European Union's (EU) member states. ...
  5. Confederate Dollar

    A currency issued by the Confederate States of America during ...
  6. CAD (Canadian Dollar)

    The currency abbreviation or currency symbol for the Canadian ...
Related Articles
  1. Top 8 Most Tradable Currencies
    Forex Education

    Top 8 Most Tradable Currencies

  2. How do I convert dollars to pounds, ...
    Forex

    How do I convert dollars to pounds, ...

  3. How U.S. Firms Benefit When The Dollar ...
    Options & Futures

    How U.S. Firms Benefit When The Dollar ...

  4. When and why did the euro make its debut ...
    Forex

    When and why did the euro make its debut ...

comments powered by Disqus
Hot Definitions
  1. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  2. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  3. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  4. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  5. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
  6. Limit-On-Open Order - LOO

    A type of limit order to buy or sell shares at the market open if the market price meets the limit condition. This type of ...
Trading Center