Author: Valentina Pasquali

Panama has two government-owned banks, National Bank of Panama and Caja de Ahorros. But the small Central American country, like the European microstates of Andorra and Monaco, has no central bank. The national economy is fully dollarized—the country, one of ten across the world, having voluntarily adopted the US dollar as its official currency in 1904. Because of its stable macroeconomic environment and low inflation, Panama is often hailed by Austrian-school economists as a model of what national economies could achieve if only governments would do away with central banks and, instead, fully embrace the free market.