Please don’t make me figure out an exchange rate when I’m traveling.
There are those of us who are not good at mathematics . I am one of them . Therefore having to calculate exchange rates on the rainfly while move around is aparticularlyexcruciating mental affair . Sometimes I just purge it all to the wind , buy the thing I desire , and figure I ’ll be surprised one mode or the other when I check my credit plug-in assertion . Is that irresponsible ? Definitely . But I ’m clearly not the only one that think this style . Irishjournalist Carl Kinsella even take to X todeclare , “ The regretful news is that Iceland is very expensive but the unspoilt news is that I have NO idea what the exchange charge per unit is so I do n’t in reality know how poorly I ’m being screw . ”
So it follow that on a recent trip toTurks and CaicosI was pleased to unwrap that the official currency of the country is none other than my hometown ’s US dollar bill . But as beguiled as it was , I was also confused . Not only is the archipelagonota part of the US , but , hey , is n’t it a British Overseas Territory ? ( Also what is a British Overseas Territory , anyway ? )
Turns out , Turks and Caicos is not the only country that use the US dollar as its official currency . TheBritish Virgin Islandsis another example , despite being a British territory . Not only that , there are many other independent countries , likePanama , that use the US dollar equally if not more than their own currentness . So the question is , what give ? What ’s in it for them ?
The Baths National Park in the British Virgin Islands.|cdwheatley/E+/Getty Images
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What is dollarization?
Dollarization is the process of adopt the U.S dollar , or another foreign currency , either to be used as the other rural area ’s official currency or to affix domestic currentness without formal legal position .
Since WWII , the act of independent countries in the worldly concern hasnearly treble . And about 60 of the 193 independent countries today employ the currency of a larger territory , often one they were once a part of , or currency union like the African Financial Community or Eastern Caribbean Currency Area . While having your own up-to-dateness allows a political science to dress interest rates and align the money supply as it see set and respond to economic crises accordingly , for many smaller or newer countries , it ’s just not executable . “ Countries typically select dollarization due to a deficiency of trust in their power to manage their own currentness effectively , often in reply to economic instability or hyperinflation , ” says Zac Mills , former World Bank economic expert turnedwildlife lensman and preservation activist .
" Since WWII , the number of independent countries in the reality has nearly tripled . "
In the case of Turks and Caicos , the archipelago has been through a few governments in their time under British regulation and just as many currency change . In the 1800s you could find US , English , and Canadian coin in circulation . In former 1900s they issue their own currency notes , where were discontinued after the Great Depression . As a British colony , they were under the control condition of the British political science of Jamaica , who in 1920 started issuing their own Jamaican pound ( JMP ) , which the country take over . When Jamaica gained independence in 1962 , the islands then became a Crown Colony and range under the control of the British authority in the Bahamas , but continued to employ the JMP . After Bahamian independency in 1973 , the British governing set an business office of the regulator on Grand Turk , and the land interchange from JMP to the US Dollar .
In 1983 , the status of Turks and Caicos changed from Crown Colony to British Dependent Territory . In 2002 , it changed once again to a British Overseas Territory . As a British Overseas Territory , the island is appointed a regulator by the British Crown . The island has full internal governance , and island-dweller born in Turks and Caicos are full British citizens .
Over the years , Turks and Caicos has maintain near relations with the US through business deal , tourism , and military initiation . From 1950 to 1981 , the US had a missile tracking post on Grand Turk , which was part of the Sound Surveillance System , an submersed listening system plan to track Soviet submarines . ( After his three earth orbit in 1962 , John Glenn successfully made landfall nearby and was brought back to the home in Grand Turk . )
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Why the US dollar?
Using the US dollar is a matter-of-fact matter of stabilization . “ The US dollar is consider one of the most stable and reliable currency globally , ” enounce Mills . “ Using it helps these territories head off the unpredictability and instability that might come with manage a smaller , less liquid currency . ”
Since the last of World War II , the clam has been the world ’s most important means of exchange . In the third quarter of 2023 , the International Monetary Fund reported that the US dollar consist roughly 59 % of globular foreign telephone exchange reserve have by central banks .
In accession to being a authentic currency , Mills says that using the US dollar make believe transactions with American tourer and line straightforward , fostering economic activity and gizmo . It can also ease trade wind and investing and make it easy for countries to engage in worldwide deal and financial food market .
And for somewhere like Panama , using the dollar bill alongside their own currentness allows them both the benefit of the stability of a strong foreign currency — aid to avoid puffiness and currency crisis — while at the same time keeping their interior identicalness . “ keep on its own currency , even if just symbolically , allows Panama to maintain a good sense of interior identity and sovereignty over its pecuniary insurance policy , ” says Mills .
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What countries use the US dollar?
So where besides Turks and Caicos , the British Virgin Islands , and Panama can you utilize the cash already in your pocketbook ? Of naturally , all the US territories : Puerto Rico , Guam , American Samoa , the Commonwealth of the Northern Mariana Islands , and the US Virgin Islands . Beyond that , we ’ve compose a handy list .
Countries that have adopted the US dollar as official currency
Bonaire , Sint Eustatius , andSaba : Special municipality of the Netherlands , these three heavily favor the US dollar , although they also use the euro . Ecuador : Adopted the US dollar in 2000.El Salvador : Adopted the US one dollar bill in 2001 ( though touted as a means to impart in financial stableness , this went against the will of the populace)Palau , theMarshall Islands , and theFederated States of Micronesia(the Freely Associated States):Under the Compact of Free Association with the United States in 1986 , these three all use the US dollar . boater : Both the Panamanian balboa and the US dollar are used . Timor - Leste : The US dollar bill has been used in this southeasterly Asian Nation since 2000 .
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Countries that use the US dollar alongside their own
Aruba : Both the florin ( AWG ) and USD are accepted . The Commonwealth of the Bahamas : use their own dollar used alongside USD . The substitution pace is 1:1.Barbados : Uses the Barbadian clam and the US buck . Belize : Uses the Belize dollar and the US dollar . Bermudas : utilise their own dollar alongside the US dollar . Cambodia : practice the US Dollar alongside the Cambodian Riel ( KHR).Cayman Islands : use their own dollar , but USD is wide accepted . Costa Rica : Uses USD alongside the Costa Rican colón ( CRC ) . The US Dollar is unremarkably accept , especially in the tourism sphere . Curaçao : The Antillean guilder ( ANG ) is prescribed and USD is widely accept . Guatemala : It is strongly recommended to have some Guatemalan quetzal ( GTQ ) , but the USD is often accepted . Honduras : Same as Guatemala , you should have some Honduran lempira ( HNL ) , but the US Dollar can be used in larger hotel and for bigger purchases . Jamaica : USD is accept alongside the Jamaican Dollar ( JMD).Lebanon : The official currentness is the Lebanese pound ( LBP ) , but in recent class the commonwealth has been lean more on USD.Liberia : Uses the Liberian Dollar ( LRD ) , but the USD is also recognized as effectual ship’s boat . Myanmar : USD is often used alongside the Myanmar kyat ( MMK).Nicaragua : wide employ the US Dollar alongside the Nicaraguan córdoba ( NIO).Saint KittsandNevis : Local currency is the Eastern Caribbean Dollar ( XCD ) , but the USD is accepted by most stores . observe that you ’ll have change in XCD.Sint MaartenandSaint Martin : Although both side of the island have their respective prescribed up-to-dateness , both accept USD . However it ’s more plebeian on the Dutch Sint Maarten than on the Gallic side of Saint Martin . Vietnam : In heavy touristed areas you may get away with USD , but you ’ll definitely want to have some Vietnamese dong ( VND ) on handwriting .
