Spanish explorers settled on the northern coast of Panam between 1501 and 1510, and in 1513 Vasco Nunez de Balboa crossed the isthmus and sighted the Pacific Ocean. Panama was incorporated into the Vice-Royalty of New Granada in 1717 and remained part of the Vice-Royalty until independence on December 17, 1819. Panam joined the Colombian federation in 1821. Great Colombia dissolved into New Granada/Colombia, Venezuela and Ecuador on November 21, 1831. The name was changed from New Granada to Colombia in 1861. Panama gained its independence from Colombia on November 4, 1903. The United States War (Defense) Department administered the Canal Zone from November 18, 1903 until September 30, 1979 when the United States ceded the Canal Zone to Panama. The Panama Canal Zone was formally handed over to Panama on January 1, 2000.
While a Spanish colony, Escudos, Pesos and Reales (XESE) were used as coins. The Spanish built a paved track across the isthmus to help transport gold and silver back to Europe. This provided sufficient coins to meet local needs. After independence, Colombian coins were used in Panama. Colombia issued silver Escudos, Pesos and Reales, adopting the Peso as the unit of account in 1847. On June 9, 1871, Colombia aligned the Peso (COP) to the 5 Franc coin of the Latin Monetary Union. Colombia went on the Gold Standard in 1880, but continued to issue paper pesos, which steadily depreciated.
After gaining its independence in 1903, Panama adopted the American monetary system. Panama issued its first silver Balboa in 1904 and has continued to issue its own Balboa (PAB) coins, though US coins also circulate in Panama. United States Dollars (USD) are legal tender in Panama. Panama briefly issued banknotes in 1941. United States Dollars were also used in the Panama Canal Zone. |
