Saving and Money · Uncategorized

Can I Use the US Dollar Abroad?

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It’s Travel Tip Tuesday! I’ve been thinking about this post for a while, but first I’ll caution you not to assume you can use the US Dollar just anywhere. What would you do if someone came to you and tried to pay for something with Russian Rubles? Or Euros? Or Australian Dollars? You’d look at them like they were crazy people! So never, ever assume you can use your local currency when you travel. You will come across as arrogant, and that is not a good impression for a visitor to make.

That said, the US Dollar is the most widely accepted currency in the world. There are some countries outside the United States that not only take the US Dollar, but there are some who use it for their country’s currency! So let’s take a little look at those places.

Countries that Accept the US Dollar (in some tourist areas, but not everywhere)*

  • Aruba
  • Bahamas
  • Barbados
  • Belize
  • Bermuda
  • Bonaire
  • Canada
  • Cambodia
  • Caribbean Netherlands
  • Costa Rica
  • Curacao
  • Cayman Islands
  • Liberia
  • Mexico
  • Myanmar
  • Nicaragua
  • Old City of Jerusalem
  • Panama
  • Phillippines
  • St. Kitts and Nevis
  • St. Maarten
  • Vietnam

Received as change in Siem Reap, Cambodia:

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That’s a $2 bill! Real, but not commonly used in the US!

Countries that have Adopted the US Dollar*

  • British Virgin Islands
  • East Timor-Leste
  • Ecuador
  • El Salvador
  • Federated States of Micronesia
  • Marshall Islands
  • Palau
  • Turks and Caicos
  • Zimbabwe

And don’t forget the US Territories*

  • American Samoa
  • Guam
  • Northern Mariana Islands
  • Puerto Rico
  • US Virgin Islands

Why the US Dollar?
When a country’s economy experiences a major collapse or hyperinflation, currency substitution (or “dollarization”) can help that country’s economy pull through. Because the US Dollar is the world’s “reserve currency” since World War II, tying to the US Dollar with its credibility and stabilization allows other countries to continue international trade more easily.**

But just because the country uses US paper money doesn’t mean they have to use US coins. In Ecuador, we were surprised that they have their own coins, and no one would accept our American coins!

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Ecuadorian coins

What Effect does this have on the US Economy?
Thankfully, very little! In theory, increased currency production could facilitate inflation in the US, but since the countries that have adopted the dollar are so much smaller than the US, there is not enough currency involved that it has much of an impact.

*This information was gleaned from Investopedia.com.
**This information comes from Transferwise.com.
Special thanks for my brother, Economist Jared Hassell!

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