Money Matters...

Friday, October 01 2004 @ 08:05 PM UTC

Contributed by: Don Winner

People interested in living in Panama always have a few basic questions about money. This short article will answer only the most basic questions and should serve as a starting point. There are many opportunities for much more detailed posts on the specifics. Any takers?
For starters, if you don't live here you might not know that the US dollar is the standard currency in circulation. The money used here is exactly the same as in the states, except that the locals call it the "Balboa" instead of the dollar. But, in effect, it's the same thing, spends the same, and there is no need to exchange currency or anything like that.

The coins are slightly different, but they are minted in the US, are exactly the same size and denominations as US coins (penny, nickel, dime, quarter, etc.) US coins work here in all the slots and soda machines and the like, and vice-versa. After awhile you don't even take notice of the difference.

Panama is considered to be a "transit country" in the war on drugs, which means that drugs pass through here on their way to the markets in the US and Europe, and the money from the sales pass through here on their way back south. So, there have been a lot of "know your customer" laws enacted in the last fifteen years or so in an effort to crack down on money laundering.

Why should you care? Because those laws make it more difficult to open a bank account here. It's really not all that hard, but the banks are required to get a copy of things like your passport, drivers license or other documentation, and letters of reference from banks where you have existing accounts. They put all this information into your file, so if you turn out to be an international criminal, they can at least tell the feds they did their best to identify you first...

Most people access their cash with ATM cards, which are widely accepted and ATM machines are everywhere. An even better deal is to open a Visa account that pays you rewards or frequent flier miles, pay for everything down here with that, and then transfer the funds to cover the card spending from your stateside accounts. You can use your Visa card almost everywhere except for the little corner stores and maybe street vendors.

I'm not going to get into the cost of living differences between the US and Panama in this article. That's a whole topic in itself. But in general, the cost of living is much lower here than in the US, so your money goes generally much further here than it does there.

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