The cordoba is the official currency of the Republic of Nicaragua. This currency is subdivided into 100 centavos, and it was initially introduced in 1912 to replace the peso. The name of the currency was chosen in homage to Nicaragua’s founder, Francisco Hernandez de Cordoba. The Cordoba has been issued three times in its history, with the current version, the cordoba oro, beginning to be circulated in 1991. The sole issuing authority of the cordoba is the Central Bank of Nicaragua, which was established in 1961. Nicaragua became a member of the Bolivarian Alliance for the Americas (ALBA) in 2007. ALBA is currently in the first stages of the creation of a multinational currency, the SUCRE. The SUCRE was first used as a virtual currency in 2010, but it is expected to make a transition in coming years to a hard currency that will presumably be adopted by all ALBA member nations.
The first national currency of Nicaragua was the peso, introduced as a series of coins in 1878. In 1912, the cordoba replaced the peso at a rate of 1 cordoba: 12.5 pesos, which made it on par with the U.S. dollar. Due to high inflation, the cordoba was revalued in 1988. The second cordoba was circulated only through banknotes and was introduced at a rate of 1 second cordoba: 1000 first cordobas. After the introduction of the second Cordoba, Nicaragua experienced the highest rate of inflation in the country’s history at 13,000 percent. This necessitated the introduction of a third cordoba in 1991. The third cordoba, dubbed the cordoba oro, was introduced at a rate of 1 cordoba oro: 5 million second cordobas.
Nicaragua is one of the poorest countries in the world. While people of wealth reside in Nicaragua, the income distribution is severely unbalanced. The country suffers from high unemployment and external debt. Even though GDP growth is not keeping up with the needs of the country, economists predict that stability is within reach. The largest economic sector in Nicaragua is services, which made up 56.9 percent of the total GDP in 2006. The second-leading sector is the industrial sector, contributing 26.1 percent to the GDP, followed by agriculture. Many Nicaraguans live and work outside the country, and 15 percent of the GDP is from money wired home to relatives. The World Bank lists Nicaragua as the second-best country in Central America for starting a business.