What is the 'PAB (Panamanian Balboa)'

PAB (Panamanian Balboa) is the national currency for the Republic of Panama which circulates alongside the U.S. dollar (USD). The currency's name honors Vasco Nunez de Balboa, the Spanish explorer, conquistador, and founder of the first Spanish settlement in Panama in 1510. Balboas are issued only in coin form and subdivides into 100 centimos.

BREAKING DOWN 'PAB (Panamanian Balboa)'

​​​​​​​PAB, the Panamanian Balboa, was introduced in 1904, replacing the Colombian Peso, following Panama’s independence from Colombia. With freedom came the introduction of silver coins in denominations of 2-½, 5, 10, 25, and 50 centimos. Later coins included coins in 1/10, ¼, ½, 1-¼, and one centesimo and changes in the metal composition and size to resemble coins issued by the U.S.

Since its inception, the Panamanian Balboa pegs to the US dollar (USD) at par. Significant American presence, starting with the construction of the Panama Canal in 1904, influences the country's currency.

Located on the thin slip of land connecting North and South America, Panama derives a significant portion of its income from toll for the use of the Panama Canal. The country declared their independence from Spain in 1821 and a month later unified with neighbor Columbia forming the Republic of Columbia.  In 1903, the region declared its independence from Columbia and became a constitutional democracy. The United States received criticism for encouraging the separation, due to their interest in reviving the failed French attempt at creating a man-made waterway between the Atlantic and Pacific oceans.

The Panamanian government was a business monopolized oligarchy until the military challenged it in the 1950s and 60s. Elections in 1968, marred by violence and fraud, led the Panamanian National Guard to oust the elected president and appointed a provisional government. The country passed a new constitution in 1972 but continued to be crippled by a succession of corrupt governments and fraudulent elections. Beginning in 1987, the U.S. would intervene into Panama again, imposing sanctions and eventually invading the country in 1989 to replace the government. Stability returned to the country in the 1990s, and this situation continues through the 2000s.

In recent years, the Republic of Panama has seen a growth in its economy, but there continues to be an unequal distribution of wealth. The updating and expansion of the Panama Canal opened in 2016, and the Canal continues to provide a significant portion of the country's income. According to the 2017 World Bank data, Panama experiences a 5.4% yearly growth in its gross domestic product (GDP) with a 1.5% annual inflation deflator

Seven Days Balboa Banknotes

In 1941, President Arnulfo Arias enacted Article 156 of the Panamanian Constitution. This Article authorized both private and public banks to issue private currency Balboa banknotes and resulted in the creation of El Banco Central de Emisión de la República de Panamá, or Central Bank of Issue of the Republic of Panama.

Seven days later a coup replaced Arias with Ricardo Adolfo de la Guardia Arango. The new government immediately shut down the banknote issue, closed the bank, and ordered all 2,700,000 notes issued to that date incinerated. Very few banknotes survived and to this day the so-called “Seven Days’ Notes” are valuable collector’s items.

Panama commemorative coins of the denominations 5, 10, 20, 50, 75, 100, 150, 200 and 500 balboas were minted from time to time to celebrate significant milestones in Panama’s history.

RELATED TERMS
  1. Panama Papers

    The Panama Papers refer to the 11.5 million leaked encrypted ...
  2. COP (Colombian Peso)

    The COP (Colombian Peso) has been the national currency of the ...
  3. Pirate Bank

    A pirate bank is a type of offshore savings account used by wealthy ...
  4. Euro Notes

    Euro notes are legal tender in the form of a banknote that can ...
  5. CLP (Chilean Peso)

    The CLP (Chilean peso) is the currency of Chile, issued by the ...
  6. Currency

    Currency is a generally accepted form of money, including coins ...
Related Articles
  1. Retirement

    6 Reasons Why Americans Retire in Panama

    Understand why more and more Americans are retiring to Latin America. Learn why Panama is a popular retirement destination for Americans.
  2. Retirement

    What Does It Cost to Retire in Panama?

    Learn how much it costs to retire comfortably in Panama, and why it has become one of the most popular retirement destinations in the world.
  3. Retirement

    Budgeting Tips: Living in Panama on $1,000 a Month

    Discover how far $1,000 in monthly income can take you in Panama, and determine whether this Central American paradise is the place for you.
  4. Managing Wealth

    Panama Papers Data Dump: Biggest Surprises

    First of all, there aren't 214,000 entities mentioned--there are more than 320,000.
  5. Retirement

    3 Safe Places to Retire in Latin America With Under $2,000 a Month

    Retired expats can enjoy a comfortable life in Latin America for $2,000/mo.
  6. Retirement

    Top 3 Retirement Havens For Expats

    From exotic Thailand to Panama, there are many different retirement destinations for people looking to stretch their fixed income.
  7. Personal Finance

    Panama Papers: Top 10 Banks For Offshore Companies (CS, HSBC)

    HSBC is responsible for more than 2,300 offshore companies. UBS and Credit Suisse each account for 1,100, and Royal Bank of Canada clocks 378.
  8. Retirement

    5 Developed Countries That Welcome Expats

    Investigate these expat havens if you seek a developed country with low barriers for getting a permanent resident visa – sometimes even citizenship.
  9. Retirement

    The 7 Best Countries for Retiring in Latin America

    You’ll find plenty of Latin American countries on this year’s lists of top places to retire abroad. Here’s a look at a few.
  10. Managing Wealth

    Iceland PM Resigns in 1st Major Casualty of Panama Papers

    A sensational release of documents by the German newspaper Süddeutsche Zeitung exposes the network of corruption and abuse of tax havens by the mega-rich.
RELATED FAQS
  1. Why Is Panama Considered a Tax Haven?

    Learn about the offshore tax haven of Panama, and discover the legal and tax structures that make Panama a premier Caribbean ... Read Answer >>
  2. What debt-to-equity ratio is common for a bank?

    Take a look at the important debt-to-equity ratio, a key metric of financial leverage, and learn what the average debt/equity ... Read Answer >>
  3. How does inflation affect the exchange rate between two nations?

    Countries attempt to balance interest rates and inflation, but the interrelationship between the two is complex and can influence ... Read Answer >>
  4. Why do some people claim the Federal Reserve is unconstitutional?

    Learn why some people believe it was unconstitutional for the government to establish the Federal Reserve Bank and why they ... Read Answer >>
Trading Center