El Salvador Colón (SVC) History and 2025 Value Insights
Explore the rich history of the El Salvador Colón (SVC), its role as the country's currency from 1892 to 2001, and its transition to the U.S. dollar. Learn how this currency shaped El Salvador's economy and its legacy today.
Thomas J Catalano, a Certified Financial Planner and Registered Investment Adviser in South Carolina, founded his financial advisory firm in 2018. His expertise spans investments, retirement planning, insurance, and comprehensive financial strategies.
What is the El Salvador Colón (SVC)?
The El Salvador Colón, abbreviated as SVC, was the official currency of El Salvador from 1892 until 2001. Represented by a 'C' with two vertical lines, the colón was subdivided into 100 centavos. On January 1, 2001, the Monetary Integration Act replaced the colón with the U.S. dollar at a fixed rate of 8.75 colónes to 1 U.S. dollar, marking a significant shift in the country's monetary system.
Origins and Evolution of the SVC
Originally, El Salvador adopted the peso in 1883, divided into 10 reales. In 1892, under President Carlos Ezeta, the currency was renamed 'colón' to honor Christopher Columbus and commemorate 400 years since the discovery of the Americas. This change symbolized a new era in El Salvador's financial identity.
Historical Milestones of the El Salvador Colón
At its introduction, the colón was pegged to the U.S. dollar at a rate of 2 colónes per dollar. It officially replaced the peso at par in 1919. The Second Monetary Law mandated the removal of damaged or altered coins to maintain currency integrity. Between 1919 and 1931, the peg remained stable until El Salvador left the gold standard, allowing the colón's value to fluctuate freely.
June 19, 1934, marked the establishment of the Central Reserve Bank of El Salvador, which gained exclusive rights to issue currency. The first banknotes were released later that year in denominations of 1, 5, 10, 25, and 100 colónes. Subsequent years saw the introduction of 2 colónes (1955), 50 colónes (1979), and 200 colónes (1997) notes. Coins were minted in various centavo and colón denominations to facilitate everyday transactions.
Initially a private institution, the Central Reserve Bank became government-controlled in 1961 and later gained autonomy in 1990, reflecting shifts in El Salvador's economic governance.
Transition to the U.S. Dollar: 2001 and Beyond
Following the civil war (1980-1992), El Salvador implemented economic reforms to stabilize growth. The 2001 Monetary Integration Act introduced the U.S. dollar as legal tender alongside the colón, effectively dollarizing the economy. This move eliminated the Central Reserve Bank’s sole authority to issue currency. To assist citizens with this transition, educational programs were launched to familiarize the public with U.S. currency denominations. Although the colón remains legal tender, the U.S. dollar dominates daily commerce.
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