In 1904, Panama declared its dolar a national currency, as a guarantee to the US, at the time the Panama channel was being built. Since then the dollar has been used together with the former Balboa. This way the Balboa also has absolute interchangeability with the dollar (full parity).
When Panama changed and accepted the dollar as the national currency, not only macroeconomic changes took place but the domestic politics were radically towards trade and cooperation with the US.
.The use of the dollar in Panama involved the use of a currency like a dollar to keep a fixed parity. At that time the credibility of a state in the international scene can be achieved by doing so. The use of the dollar as a currency is also seen as an element of the cultural influence of the US in the domestic affairs of the country.
Many underdeveloped countries have resolved this as well as pressure from outside to modernize and acquire international credit.
