The US dollar is the world’s most recognized currency and it has been used to measure the performance of major world currencies in the money market. International bodies like the World Bank and the International Monetary Fund use it as the main currency when giving out loans and grants. Forbes also measures the worth of wealthy people using the American dollar. Apart from the USA, there are independent countries around the world that use the American dollar as their national currency in a form of either partial substitution or full substitution due to political and economic factors.
Countries That Use the US Dollar
In response to the uncontrollable inflation brought about by disastrous economic policies and international sanctions, Zimbabwe was forced to adopt the US dollar in place of the Zimbabwean currency which had been rendered worthless. The government in 2009 allowed Zimbabweans to use the dollar to conduct business activities alongside other major currencies like the Euro and the South African Rand. With the economy showing signs of recovery, there is no sign of the government lifting the suspension on the use of the local currency.
The country has no economic crisis to warrant the use of the dollar, but it allows the use of the dollar alongside the national currency called the Colones. Tourists visiting the country are encouraged to bring along the American dollars but in smaller denominations which are in good condition. The government doesn’t restrict their use since it allows traders to bill their goods using the local currency and their equivalent in dollars.
The Iraqi currency is called the Iraqi dinar. US dollars were used in the aftermath of the 2003 US-led invasion where the economy collapsed. The Coalition Provisional Authority used US dollars to pay Iraqi security officers and their army before the Iraqi dinar was reintroduced after the CPA handed over to an Iraqi government. The dollars are still in use alongside the dinar in business transactions.
Despite the national currency being the Balboa, the country still uses the dollar as the national currency in business activities. The country only uses the dollar as a legal tender but not as a paper currency. Since Panama has no monetary policy, international transactions were done by using the dollar since the country still had a close relationship with the US. Thanks to this, the country enjoyed an automatic monetary stability which has enabled the smooth circulation of money in the economy.
Benefits of Using the US Dollar
The use of the dollar has proved to be beneficial to the countries’ economies especially in the case of Panama. There are questions whether it encourages the foreign dominance in the affairs of the country by nationalist groups. The prestige of using the US currency is not lost since the US is widely seen as the leader of the free world. American dominance of the world is not just in military perspective but in the world economy too. By using the dollar, these countries do expect to benefit from that dominance through trade.