While it is no surprise that the U.S. dollar is the official currency of the United States, it may surprise some that the dollar is also the official currency of a host of U.S. territories and sovereign nations around the world. In addition, it’s the quasi-official currency of many other nations that commonly accept U.S. dollars in addition to a local currency. Let us take a look at the places where the U.S. dollar is usually accepted for payment.

Official Use of the U.S. Dollar

In 2014, over 318 million people in the United States used the U.S. dollar to conduct more than $17 trillion dollars of economic activity. Prospective travelers may like to know that there are five U.S. territories and seven sovereign countries that also use the U.S. dollar as their official currency of exchange. Collectively, more than 358 million people throughout the world used the U.S. dollar as their official currency of exchange, which in turn translates into more than $17.25 trillion dollars of economic activity. 

The table below provides an overview of the U.S. territories and independent sovereign nations that use the U.S. dollar as their official medium of exchange.

U.S. Territory or Foreign Country

Relationship with United States

Geographic Location

Population (2014)

Gross Domestic Product  (2013)

United States of America

Federal Republic

North America

         318,636,000 

 $16.8 Trillion 

Commonwealth of Puerto Rico

Unincorporated territory of the U.S.

Northeastern Caribbean

              3,579,000 

 $103.1 Billion 

Ecuador

Independent country

Northwestern South America

           15,792,000 

 $94.5 Billion 

Republic of El Salvador

Independent country

Central America

              6,126,000 

 $24.3 Billion 

Republic of Zimbabwe

Independent country

Southeast Africa

           13,348,000 

 $13.5 Billion 

Guam

Unincorporated territory of the U.S.

Western Pacific Ocean

                 161,000 

 $4.9 Billion 

Virgin islands of the United States

Insular area territory of the U.S.

Caribbean

                 104,000 

 $3.8 Billion 

Democratic Republic of Timor-Leste

Independent country

Maritime Southeast Asia

              1,202,000 

 $1.6 Billion 

American Samoa

Unincorporated territory of the U.S.

South Pacific Ocean

                    54,500 

 $711 Million 

Commonwealth of the Northern Mariana Islands

Unincorporated territory of the U.S.

Western Pacific Ocean

                    51,500 

 $682 Million 

Federated States of Micronesia

Six Sovereign Countries

Subregion of Oceania

                 101,000 

 $316.2 Million 

Republic of Palau

Island Country

Western Pacific Ocean

                    16,900 

 $247 Million 

Marshall Islands

Island Country

Near Equator in the Pacific Ocean

                    53,800 

 $191 Million 

Source: Encyclopedia Britannica, Inc.  Britannica Book of the Year (2015)

The British Virgin Islands and the British Turks and Caicos islands also use the U.S. dollar as their official currency of exchange.

Quasi-Use of the U.S. Dollar

The U.S. dollar is also widely used throughout the world as a quasi-currency of exchange. While it should be no surprise that the U.S. dollar is widely accepted for commerce in both Canada and Mexico, the U.S. dollar is accepted in numerous tourist destinations, including the Commonwealth of the Bahamas, Barbados, Bermuda, the Cayman Islands, Sint Maarten, St Kitts and Nevis, the ABC Islands of Aruba, Bonaire, Curacao, and the BES Islands, which also includes the island of Bonaire, as well Sint Eustatius and Saba, now collectively known as the Caribbean Netherlands. (Read Find The Top Caribbean Islands For Retirement)

The U.S. dollar is also used as a quasi-currency in a host of popular U.S. retirement destinations, including the countries of Belize and Panama, and in some places in Costa Rica. U.S. dollars are also widely accepted in Nicaragua, and people in the U.S. military can likely attest that the U.S. dollar is gaining widespread popularity throughout the Philippines (read more This Asian Nation Is Poised For Steady Growth). For the truly adventurous traveler, the acceptance of the U.S. dollar can be tested in countries such as the Republic of the Union of Myanmar (Burma), Cambodia, Liberia, the major cities of Vietnam, and the Old City of Jerusalem.

The Bottom Line

The U.S. dollar is the most widely used currency in the world because of its stability. Barring some unforeseen catastrophe, the U.S. dollar will likely remain the global currency of choice until such a futuristic time when a global digital money system is invented and accepted. People planning on using the U.S. dollar outside of the United States should notify their banking and credit card company as a precaution from having their accounts frozen due to suspicious overseas activities. Consumers should also reach out to their bank and credit cards to clarify any foreign currency transaction fees.

 

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