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. CAD (Canadian Dollar)

    The currency abbreviation or currency symbol for the Canadian ...
  3. Euro

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

    A currency issued by the Confederate States of America during ...
  5. European Central Bank - ECB

    The central bank responsible for the monetary system of the European ...
  6. Monetary Policy

    The actions of a central bank, currency board or other regulatory ...
RELATED FAQS
  1. How do I convert dollars to pounds, euros to yen, or francs to dollars, etc.?

    Currency can be converted using an online currency exchange or it can be converted manually. To use either method, you must ... Read Full Answer >>
  2. When and why did the euro make its debut as a currency?

    On January 1, 1999, the European Union introduced its new currency, the euro. Originally, the euro was an overarching currency ... Read Full Answer >>
  3. Are eurodollars related to the currency called the euro?

    Eurodollars have little to do with the official currency of the European Union, the euro (EUR). In 1999, the euro was implemented ... Read Full Answer >>
  4. How is a block chain network useful for trading goods and assets in virtual currencies?

    Perhaps the most famous quote associated with blockchain technology came from an anonymous virtual currency user, who described ... Read Full Answer >>
  5. What types of companies benefit from reporting results utilizing constant currencies ...

    Any company that does a substantial amount of business in foreign countries, and is therefore subject to foreign currency ... Read Full Answer >>
  6. What are key benefits to a country that has engaged in a policy of currency depreciation?

    In the modern world, most currencies represent fiat money not backed by any commodity or precious metal and whose value is ... Read Full Answer >>
Related Articles
  1. Forex Education

    Top 8 Most Tradable Currencies

    Currencies can provide diversification for a portfolio that's in a rut. Find out which ones you need to know.
  2. Options & Futures

    How U.S. Firms Benefit When The Dollar Falls

    When the greenback is weak, smart investors will invest in multinational companies to benefit.
  3. Mutual Funds & ETFs

    The Top 3 ETFs For Investing in Scotland

    Learn about three of the best exchange-traded funds with exposure to Scotland, the British pound sterling and the rest of the United Kingdom.
  4. Forex Strategies

    Can Forex Trading Make You Rich?

    Forex trading may be profitable for hedge funds or unusually skilled currency traders, but for average retail traders, forex trading can lead to huge losses.
  5. Economics

    Why The Dollar’s Strength Can Continue

    Overall, the U.S. dollar has rallied this year, with the Dollar Index (DXY) now up by roughly 8 percent year-to-date, but the gain hasn’t been steady.
  6. Investing News

    Will Greece Return to the Drachma?

    More drama from Greece, as rumors swirl about a return to the drachma.
  7. Mutual Funds & ETFs

    ETF Analysis: PowerShares DB US Dollar

    Discover how an ETF can be used to bet on multiple different currency futures contracts with the PowerShares DB Dollar Index Bullish Fund (UUP).
  8. Economics

    How Does China Manage Its Money Supply?

    Here's how the Central Bank of China manages its currency rates and the money supply.
  9. Forex Strategies

    Three Currencies Benefiting From Low Oil Prices

    The Indian rupee is clearly the biggest beneficiary of the slide in oil prices, followed by the Indonesian rupiah and British pound.
  10. Mutual Funds & ETFs

    Are Currency Hedged ETFs a Good Idea?

    Considering currency-hedged ETFs? Here's a look at eight and what you need to know right now.

You May Also Like

Hot Definitions
  1. Dog And Pony Show

    A colloquial term that generally refers to a presentation or seminar to market new products or services to potential buyers.
  2. Topless Meeting

    A meeting in which participants are not allowed to use laptops. A topless meeting organizer can also ban the use of smartphones, ...
  3. Hedging Transaction

    A type of transaction that limits investment risk with the use of derivatives, such as options and futures contracts. Hedging ...
  4. Bogey

    A buzzword that refers to a benchmark used to evaluate a fund's performance. The benchmark is an index that reflects the ...
  5. Xetra

    An all-electronic trading system based in Frankfurt, Germany. Launched in 1997 and operated by the Deutsche Börse, the Xetra ...
  6. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!