COUNTRIES THAT DON’T ISSUE THEIR OWN CURRENCY

Countries that only use a foreign currency

US dollar: Ecuador, East Timor, El Salvador, Marshall Islands, Micronesia, Palau, Turks and Caicos, British Virgin Islands, Zimbabwe.

The US dollar is the most widely used currency in the world, with many countries employing it as an accepted alternative to their own currency. But some have simply adopted the currency as their own, notes and all, in what is known as “dollarization.” They don’t have control over the currency—only the Federal Reserve in Washington sets monetary policy. Both Ecuador and El Salvador adopted the US dollar in 2000, following the creation of free-trade blocs like NAFTA and the EU and the debut of the euro, making even the notion of a “single currency for the hemisphere more plausible and attractive.”

Countries in a currency union

Euro: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.

Calls for monetary union in Europe date back to the 1920s, but things got serious when the European Commission (of the European Economic Community, precursor to the European Union) began looking into ways to stabilize fluctuations between the their currencies in the late 1960s. In 1989, the path to monetary union was set out in the Delors report. In 1992, the Maastricht Treaty was signed, which created the EU and set up the path to the launch of the euro in 1999. In 2002, euro notes and coins entered circulation.

There are extensive criteria to join the euro, but nothing in the EU treaties about leaving it—which was unfortunate, as many countries’ finances came under severe strain in the aftermath of the 2008 financial crisis. (None more so than Greece, which at one pointed owed $250,000 for each working adult.) While the euro looked doomed for awhile, the problem was solved using one of the best traditions of capitalism: throwing more debt at the problem. Greece was bailed out—twice—and there was one bailout each for Portugal, Ireland, and Cyprus by the euro zone countries and the IMF. Spain’s banks were bailed out, too, and a 500 billion-euro fund was set up to permanently act as a firewall to prevent this from happening again.

Alternatively…

Many places both officially and unofficially allow the trade of foreign currencies alongside their own. Residents from Belize to North Korea can spend in US dollars, for example. Panama has had the US dollar as legal tender since 1904, alongside the Panamanian balboa, and was viewed as a special case in Latin America because of the Panama Canal and its huge trade links with the world’s richest country. Others are usually based on relative economic might and regional proximities; Lesotho and Namibia also use South Africa’s rand and small islands like Tuvalu and Nauru use Australian dollars.

To read the complete article, see:
Here are all the countries that don’t have a currency of their own (qz.com/260980/meet-the-countries-that-dont-use-their-own-currency/)

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