The official currency of Guatemala is the quetzal. The quetzal is a decimal currency subdivided into 100 centavos, also known as lenes. The name of the currency comes from the national bird of Guatemala, the Resplendent Quetzal, whose tail-feathers were traditionally used as a form of currency by the Mayan people. The quetzal is issued by the Bank of Guatemala, the nation’s central banking organization.
The Guatemalan quetzal was first introduced in 1924 to replace the peso. Two years later, the Central Bank of Guatemala was established to maintain the value of the currency and act as a banker for the government. The quetzal was set on the gold standard, and it was initially valued equal to the U.S. dollar, or 60 pesos. After the 1944 democratic revolution, currency reform was adopted in Guatemala, and the Bank of Guatemala was established to replace the Central Bank of Guatemala. At that time, the quetzal was pegged to the U.S. dollar through the Bretton Woods system. The U.S. dollar peg was maintained until 1979 when the quetzal was floated on the market. A series of economic laws passed in the decades following the establishment of the Bank of Guatemala served to strengthen the central bank. The Bank of Guatemala’s primary mission is to promote the stability of prices, and the bank’s objective is to develop the national economy, ensure smooth monetary exchanges and promote stable credit conditions.
The Guatemalan quetzal is circulated through both coins and banknotes. Coins are minted in aluminum, copper and cupronickel in denominations of 1, 5, 10, 25 and 50 centavos and 1 quetzal. Banknote denominations currently circulated include denominations of 1, 5, 10, 20, 50, 100 and 200 quetzals. Approval for new 500-quetzal and 1000-quetzal notes is still pending as of 2011. The denominations on banknotes are printed both in Arabic and Mayan numerals.
Guatemala has the most area and the largest population of any Central American country. The GDP per capita is approximately half that of major South American countries, such as Brazil and Argentina. The economy of Guatemala is primarily based on agriculture and the export of agricultural products, including coffee, bananas and sugar. Years of civil war ended in 1996, and foreign investment has increased dramatically since that time. However, widespread poverty, low government funds and political unrest still hinder the development of a stronger economy.