Letter to the Editor: Greenback Is a Reason to Rejoice in Panama

A letter to the editor of the Financial Times from Professor Steve H. Hanke.

Sir, In contemplating what would happen if Ireland were to leave the European Union (June 23), Wolfgang Münchau declares, in a sentence used as the article’s “pull quote”, that: “The Irish could use the euro if they wanted to but this would be like Panama using the dollar — a little sad, really.”

Panama has used the US dollar since 1904, and Panamanians are not sad about that. Indeed, they realise that the secret to the success of Panama as a vibrant international banking centre and its current economic boom (a real GDP gross domestic product growth rate of 11.2 per cent in 2007) is the adoption of the greenback.

Source: World Economic Outlook (April 2008), IMF

The table above indicates just why the US dollar evokes nothing but joy in Panama.

Steve H. Hanke is a senior fellow at the Cato Institute, a Professor of Applied Economics at the Johns Hopkins University, and a senior advisor to PanAmerica Capital Group, Inc., of Panama City, Panama.