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.

BREAKING DOWN '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. Departugal

    Departugal, the Portuguese spinoff of the term Brexit, refers ...
  2. CLP (Chilean Peso)

    The CLP (Chilean peso) is the currency of Chile, issued by the ...
  3. Currency Pair: EUR/USD (Euro/U.S. ...

    The Currency Pair EUR/USD is the abbreviation for the euro and ...
  4. Eurozone

    The eurozone is a geographic area that consists of the European ...
  5. Currency ETF

    Currency ETFs (exchange-traded funds) aim to replicate movements ...
  6. Currency Board

    A currency board is a monetary authority that makes decisions ...
Related Articles
  1. Retirement

    Can I Retire In Portugal With $200,000 of Savings?

    Your savings (and your Social Security) will go surprisingly far on the sun-soaked shores of Portugal. Here's how to figure your retirement budget.
  2. Retirement

    How Much Money Do You Need to Retire in Portugal?

    Portugal is often cited as one of the, if not THE, most affordable European retirement destination. Here's a rundown of some typical costs for retirees.
  3. Retirement

    Top 4 Retirement Cities in Portugal

    With its low cost of living and diverse towns and cities, Portugal has a lot to offer retirees. Here's how to find the right place for you.
  4. Taxes

    Which Countries Have the Highest Taxes on High Incomes?

    These countries charge the highest taxes on high incomes.
  5. Insights

    Disbanding The Euro - A Worst-Case Scenario

    What would the fallout be if the world's second-largest currency disappears?
  6. Trading

    Top 5 Hardest-Hit Currencies

    The value of a country's currency is dependent on many factors that will cause it to fluctuate, relative to other world currencies.
  7. Trading

    Currency fluctuations: How they effect the economy

    Currency fluctuations are a natural outcome of the floating exchange rate system that is the norm for most major economies.
  8. Trading

    5 Failed Currencies And Why They Crashed

    In light of speculation that the euro is in trouble, we look at currencies that were once widely used but are now defunct.
  9. Tech

    How Would The Euro Trade If If A Grexit Occurs?

    In the event of a Grexit, the euro could head towards parity with the USD.
  10. Investing

    Buying Euros as a Long-Term Investment: Risks and Rewards

    Learn about the potential risks and rewards of long term investing in the euro and the current status of the European Union's financial markets.
RELATED FAQS
  1. How do you make money trading money?

    Trading money, particularly in the forex market, is a speculative risk, as you are betting that the value of a currency will ... Read Answer >>
  2. What is foreign exchange?

    Foreign exchange is the conversion of a country's currency into another. In a free economy, a country's currency is valued ... Read Answer >>
  3. How do I convert one type of currency to another, such as dollars to pounds?

    Currency can be converted through online exchanges or manually, but you must look up the rate with an online calculator or ... Read Answer >>
  4. Which developed country has the most debt?

    Discover the nations that have the largest net government debt, viewed in terms of absolute dollar amount or as a percentage ... Read Answer >>
Hot Definitions
  1. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing a company that measures its current share price relative ...
  2. Internal Rate of Return - IRR

    Internal Rate of Return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments.
  3. Limit Order

    An order placed with a brokerage to buy or sell a set number of shares at a specified price or better.
  4. Current Ratio

    The current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-term obligations.
  5. Return on Investment (ROI)

    Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment or compare the efficiency ...
  6. Interest Coverage Ratio

    The interest coverage ratio is a debt ratio and profitability ratio used to determine how easily a company can pay interest ...
Trading Center