Panama Bank Account – Currency Selection

Introduction – Many of our clients come from all over the world and open up Panama Bank Accounts for Panama Corporations and Foundations. The question of what currency to use is a common question. Here are the answers BUT please bear in mind we are just a Panama Law Firm and we have no ability to predict the future.

Dropping US Dollar – This is a common story. I do not want a US dollar account the dollar is dropping and will soon be worthless. OK. I guess we need to dissect this and see all the ins and outs of this dropping dollar scenario to enable us to better select a currency for the Panama Bank Account.

Effects of the Dropping Us Dollar – First off let us not forget that the low dollar benefits a lot of USA industries especially those that export goods. Some industries in the USA that benefit from a low dollar would be those that export into other countries such as: auto manufacturers, auto parts manufacturers, tourism (many people come to USA when dollar is low), hi-tech, military, aircraft manufacturers like Boeing, boat manufacturers, pharmaceutical companies, stocks since they can be a bargain to those in other countries, investment real estate since that brings foreign investment into the USA, medical equipment, communications and the list goes on and on. True for the regular consumer a low dollar stinks in that their dollar does not go very far. A low dollar also hurts companies importing into the USA like say BMW since it prices their goods very high in the American market. The low dollar helps the USA companies sell in other countries since their goods are more affordable since the foreign currency can buy more dollars. Please take note that since the low US dollar the EU economy has been pretty bad. Also please take note that the EU can not just stand still and let the US dollar drop and drop since it will eventually devastate their economy. Right now gas in the UK is selling for $6.00 to $8.00 a gallon. The EU will eventually make some moves to drop the Euro against the dollar to strengthen their economy. When tourists flock into the USA it messes up the balance of payments for the EU countries and helps the economy in the USA.

Worthless US Dollar Fears – The truth is the USA still is a strong economy in the world. Many goods and industries are dominated by them. They have had a lot of businesses move away from the USA and go offshore. They still have major stock, bond, commodity and futures exchanges operating there. Things are not good there for sure. They have a lot of home foreclosures, homeless people, high crime rates, restrictive business laws and practices, high labor costs, lots of litigation, and other negatives but they still run a serious powerhouse economy and one should not be so fast to write them off and think their dollar will go deteriorate into nothing of value. As the dollar drops USA imports become more and more affordable and this serves to shore things up pretty good.

Fundamental Indicators – Once it was explained to me that fundamental indicators are fairly worthless in terms of predicting stock market movements. Of course I balked. Then it was shown to me that on a single day many stocks in the OEX or Fortune 100 all moved together in the same direction together while the individual issues each had widely varying dividends, profits, sales etc. So much for fundamentals was my conclusion. Remember if predicting the market was so easy the big brokerage houses would not be interested in getting you to invest for a commission, they would be too busy managing their own accounts.

Technical Indicators – Again this is another misconception. Using statistics is not going to predict future outcomes with reliability since the amount of variables is practically unlimited and all technical programs reduce the amount of factors or variable so as to be able to massage the date into an understandable meaningful prediction. If one put 5100 variables into the program one would hardly ever be able to get enough of a difference to predict a movement. Once again why would someone want to let you in on a trading program that was effective, wouldn’t they be too busy trading their own account. Each week this law firm receives several phone calls from people all around the world with a Forex or other trading program. The general theme is our members are going to soon be taking tremendous profits and we want an offshore structure for them to put their money into please help us set up a program. We have had a lot of these calls and never ever once have we seen any of this come to fruition. It is so bad that we sometimes think these are Nigerian scammers calling us to see if we are dumb enough to get greedy and try to invest with them and we are not kidding.

Panama and the US Dollar – Panama uses the US Dollar as its national currency. Please understand that Panama has no central bank like the USA has the Federal Reserve Bank. Panama and its constituents do not pay interest to a central bank for the money supply like the USA. There is no such debt in Panama. If the US dollar became disadvantageous to use Panama could easily switch to another currency. It would simply be a matter of setting a conversion rate and a time frame for which to do the exchange at the banks. Right now the dollar works so that is what we use. We are one of the few countries in the world not paying interest to a central bank like the Federal Reserve Bank. There is no currency being used that is backed by any precious metal anymore. Switzerland was probably the last and it stopped backing the Swiss France some years ago.

The Euro and the New EU Nations – The EU just took in many Eastern European Countries and these were countries with high unemployment and weak economies. I guess we need to wait and see just how the EU economy reacts to this sudden and massive influx of people who are used to earning a mere fraction of what the western EU people were earning. Romania for instance has an average wage of $300 a month and compared to the UK or France this is nothing. Now these people from the new countries can work and live anywhere in the EU essentially. This will drag down wages. As wages go down then people lose their high paying jobs and then they have debt they can not pay. So we need to see where this all goes but I see a big downside for the EU.

Panama Banking – Basically we have two currencies available for banking. The Euro and the US Dollar which is the national currency of Panama. A client is free to select whichever they are comfortable with but remember if the Euro drops you bank account can also drop. Panama real estate which can be purchased relatively anonymously is certainly a good buffer against inflation and currency fluctuations.