What is Happening With the One Dollar (Balboa) Coins in Panama?

 
2,246Views 0Comments Posted 07/07/2024

Will the one dollar Balboa coins be taken out of circulation or not?  The controversy surrounding the circulation of these coins began more than two years ago, and has been revived this year, after José Raúl Mulino was elected president of Panama.  These coins, introduced during the administration of former President Ricardo Martinelli, who is currently sheltered in the Nicaraguan Embassy, ​​have once again become the center of attention in public opinion.  In this article we explain in five key points: What is happening with the one dollar balboa coins? 

 

1-The conflict began in 2022, when the Ministry of Economy and Finance (MEF) announced that it would no longer mint one-dollar balboa coins. “Minister Alexander announced that there are no plans to continue minting the coins,” said then- Deputy Finance Minister David Saied.  Shortly after, the MEF and the National Bank filed a complaint for counterfeiting of coins alluding to the Nuestra Señora de La Merced Church and the single-color World Youth Day (WYD) logo, minted in 2019.  During the last months of 2022, a wave of counterfeit coins flooded the market, and reports of counterfeiting continue to this day. The situation generated concern and mistrust among citizens, merchants, and the government.

 

2-The controversy was recently rekindled when Javier Carrizo, manager of the National Bank, announced that a bill was being considered that could put an end to the circulation of these coins. Carrizo explained that the MEF was working on legislation that would establish a certain life span for the coins or withdraw them completely from the market. This information had an almost immediate impact on the economy.

 

3-After the announcement, some users reported that merchants in neighborhood convenience stores stopped accepting coins. In addition, the Albrook Terminal reported that transportation cards could no longer be recharged with one balboa coins. Gustavo Granados, director of operations at the terminal, explained that the decision was made after one of the banking service providers had increased the cost of handling these coins approximately 55 times since September. "We made this decision because of this increase and we try to respond to the user.  In addition, we have cash registers available so that customers can make payments with other coins such as 5 cents, 10 cents, 25 cents, among others," said Granados.

 

4-In response to these events, Carrizo clarified on Monday, June 17, that the coins would not be withdrawn from circulation. Instead, defective, damaged, scratched, stained and counterfeit coins will be replaced by destroying them. In addition, Carrizo called on all businesses to accept the coin, assuring that it will continue to be legal tender.

 

5-Regarding the cancellation of recharges with these currencies at the Albrook Terminal, Carrizo requested that a solution be found, highlighting that the currency must be accepted in all businesses and nationwide.  The problem, according to users, is that "paper" dollars are also almost extinct, due to the massive circulation of martinellis.

 

During the Martinelli administration, a total of 40 million one-balboa coins were minted, while during the Juan Carlos Varela administration, 60 million more were minted. The production of these coins is made in Canada at the mint, with an average cost of 30 cents per coin, including delivery in Panama.  When the effectiveness of this currency was being supported, one of the advantages was the useful life of a paper dollar, which is approximately two years, while that of coins is 20 years. However, its easy counterfeiting led to consideration of its elimination.  In this regard, the population expects clear measures to ensure stability and confidence in the use of these currencies in the daily economy.