Overview
The Cape Verdean Escudo is the official currency of Cape Verde. It is issued and managed by the Bank of Cape Verde. The Escudo is pegged to the Portuguese Escudo (now obsolete, replaced by EUR), maintaining a fixed 1 CVE = 0.55 PTE = €0.0030 exchange rate. This peg reflects Cape Verde's historical ties to Portugal and its strategic position as an island nation in the Atlantic.
Etymology & History
The word "Escudo" derives from Portuguese ("shield"), reflecting Portuguese monetary tradition. Cape Verde, as a Portuguese colony, adopted the Escudo in 1914, replacing earlier Portuguese-era currencies. Upon independence in 1975, Cape Verde retained the Escudo, maintaining ties to Portugal's monetary system. The peg has been maintained throughout Cape Verde's post-colonial history.
Cape Verde's monetary history includes Portuguese colonial currencies, the Cape Verdean Escudo (1914–present), and the transition from escudo to effective EUR peg (after Portugal adopted the euro in 2002).
Timeline of Key Events
| Year | Event |
|---|---|
| 1914 | Cape Verdean Escudo introduced under Portuguese rule |
| 1975 | Cape Verde gains independence; escudo retained |
| 1998 | Escudo pegged to Portuguese Escudo (1 PTE = 1.81 CVE) |
| 2002 | Portugal adopts euro; CVE peg adjusts accordingly |
| 2010–present | Stable peg maintained; currency stability anchored |
Current Denominations
Coins in circulation: 50, 100, 200 Centavos; 50, 100, 200, 500 Escudos (limited circulation)
Banknotes in circulation: 500, 1,000, 2,000, 5,000, 10,000 Escudos
Withdrawn: None actively withdrawn (full series in circulation)
Exchange Rate Regime
Fixed peg (indirectly to EUR via Portuguese Escudo historical peg): 1 CVE = ~0.0093 EUR (maintained via historical linkage to Portugal).
Convertibility
- Current account: Fully convertible
- Capital account: Convertible with minor restrictions
Monetary Policy Framework
The peg limits independent monetary policy. Bank of Cape Verde maintains foreign exchange reserves to defend peg. Monetary conditions influenced by Portuguese monetary policy (and now ECB indirectly).
Notable Characteristics
- Island nation: Geography isolates economy; tourism primary sector
- Portuguese colonial legacy: Currency peg reflects historical ties
- Remittance-dependent: Diaspora remittances critical income source
- Tourism-driven: Currency stability attracts visitors and investment
- Low denomination currency: High denomination notes relative to island economy size
- African offshore financial center: Modest banking and finance sector
- Climate vulnerability: Drought and maritime challenges; currency stability important