Panama leader tells Germany he wants to adopt euro

Reuters News

10/18/2012 2:19:52 AM - Reuters News

BERLIN (Reuters) - Panama would like to introduce the euro as legal tender alongside the U.S. dollar, President Ricardo Martinelli told German Chancellor Angela Merkel on Monday during a visit to Europe.

"In Panama the currency in free circulation is the American dollar and I told the chancellor we are looking for ways for the euro to become another currency of legal circulation and to be accepted in the Panamanian market," President Ricardo Martinelli told a joint news conference with Merkel in Berlin.

Martinelli provided no details about the switch but he expressed "full confidence" in the German and European economies and said he expected the euro zone debt crisis would soon pass.

Seventeen of the European Union's 27 member states are in the euro zone but euros are also in circulation in a number of non-EU countries, including Kosovo and Montenegro in the Balkans as well as tiny Monaco and Andorra, and in overseas territories.

Panama's dollarized economy - almost 10,000 kilometers from mainland Europe - is one of the fastest growing in Latin America, expanding 10.6 percent last year with help from heavy infrastructure spending including the expansion of the Panama Canal.

Financial markets' fears of a possible meltdown of the common currency have eased since the European Central Bank said it was ready to buy unlimited quantities of sovereign debt to reduce borrowing costs of vulnerable countries such as Spain.

But Merkel, head of the currency bloc's largest economy, has said Europe needs to persevere with tough austerity measures and move towards closer banking, fiscal and political union in order to secure the euro's future.

(Reporting by Stephen Brown; Editing by Gareth Jones and Patrick Graham)