The Republic of Panama is at the crossroads of Central and South America, bordered by Colombia, Costa Rica, the Caribbean Sea, and the Pacific Ocean. Long before the Spanish colonists came in the 16th century, the country was occupied by indigenous tribes. 

In 1821, Panama gained independence from Spain and joined the Republic of Gran Colombia along with Nueva Granada, Ecuador, and Venezuela. In 1903, it seceded from Colombia, making way for the construction of the Panama Canal which was finished by the US Army Corps from 1904 until 1914.  

Strategically located on the Isthmus of Panama, the country has a high-income economy that relies primarily on a well-developed services sector, including the Panama Canal operations, logistics, insurance, flagship registry, banking, container ports, tourism, and the Colon Free Zone. With the expansion of the Panama Canal, economic growth is expected to boost about 25% of the current GDP. Despite its high-income economy, about 30% of its population still lives in poverty with its uneven income distribution and educational disparities.  

The Panamanian balboa, along with the United States dollar, is among the official currencies of the Republic of Panama. Named after the Spanish conquistador Vasco Nunez de Balboa, the monetary unit is divided into 100 centesimos. It replaced the Colombian peso in 1904 after the nation gained its independence, and has been pegged to the US dollar, except in 2016. The country never had a central bank but has the National Bank of Panama for nonmonetary responsibilities of central banking in Panama. In 1941, President Arnulfo Arias enforced the government to issue banknotes, hence, the Central Bank of Issue of the Republic of Panama was established. The bank was authorized to release balboa banknotes on October 2, 1941. After a week, Arias was replaced by Ricardo Adolfo de la Guardia Arango. The new presided closed the bank, withdrew the notes, and burned all notes that weren’t issued. These paper bills are called “Arias Seven-Day”.

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