As many who follow local News are aware, the President of Repúblic of Panama, Ricardo Martinelli made a surprise announcement while in Germany this week. To the surprise of his hosts and residents of Panama he suggested that Panama will be adopting the Euro as a third currency.
Currently we have two legal currencies, the Balboa, as of this time only in coins, including the new and not so loved, one balboa coin, usually called the Martinelli. The one Balboa coin which is minted in Canada has an image of Balboa. Balboa was the Conquistador who is credited with making all the indigenous of this portion of the world second class citizens in their own country; mostly because they did not understand what a country was supposed to be.
In addition the Balboa, Panama uses the US dollar, which historically kept Panama from the outrageous inflation it is suffering now. This inflation is a function of an international surplus of dollars, except in my pocket, and a decreasing demand; except by me.
So now in some misguided effort to expand good will from Panama to Europe, which has a surplus of Euros as well as Dollars, the President has offered to help Europe to export some of their devaluing paper to join the devaluing dollars and the weighty metallic Balboa in Panama.
At no time did anyone suggest even the most rudimentary problem, the Balboa is worth a Dollar, in fact except to Citibank they are the same thing. Citibank which is in Panama, the US and Europe, charges it’s credit card users 4% to convert dollars to dollars, if the new dollars are used in Panama.
Imagine the delight at Citibank in Panama if the Euro is tossed into the mix. The value of dollars and Euros are not tied together and fluctuate daily. Now, when a taxi driver tries to gouge you, at least you know you can pay in Balboas or Dollars, equal value. After this transition, you might negotiate thinking dollars, and need to pay in Euros, oops. Never underestimate the wisdom of a taxi driver. Nor should you ever underestimate the ability of a bank to earn a commission in a currency exchange.
But not to worry, The President will soon be visiting China where the up and coming currency is the yuan, pronounced by me as the Juan. That is a clear enticement to a major trading partner. The Panamanian banking industry would love the arbitrage of being the world broker of Balboas to Dollars to Euros to Yuans. Yuans would become the wager because they are under valued and can be used to teach Mandarin in the public schools of Panama. Every family, with or without a Juan, will want a pile of Yuans.