Costa Rican Colón Explained: Currency History & Economic Insights

What Is the Costa Rican Colón (CRC)?

The Costa Rican colón (CRC) is the official currency of Costa Rica, named after the explorer Christopher Columbus. Established in 1896, the colón has been the country's primary medium of exchange and continues to play a pivotal role in its economy. As of July 2023, the exchange rate was roughly 546 colones to one U.S. dollar, and while U.S. dollars are widely accepted for transactions, the colón remains the preferred currency in local businesses.

We'll cover the history, value, and role of the colón in Costa Rica's economy and provide practical tips for international visitors.

Exploring the Origins of the Costa Rican Colón

The name of Costa Rica's currency honors Italian explorer Christopher Columbus, whose name in Spanish is Cristóbal Colón.

Columbus was the first European to visit Costa Rica. He did so on his final journey to the Americas in 1502. An unconfirmed legend claims that Columbus gave the country its name.​​​​​​​

Historical Development of the Costa Rican Colón

The Costa Rican colón was adopted as the national currency in 1896, about 70 years after Costa Rica and its Central American neighbors declared independence from Spain. The colón replaced the Costa Rican peso with a one-to-one exchange ratio. The previous peso currency, a legacy of the colonial era, was divisible into eight Spanish reales.

The colón was introduced at par to the peso, and the two currencies co-existed for a time. At first issue, gold coins ranging in denominations from two to 20 colones were issued along with silver 50 centimos coins. One hundred centimos equaled both one colón and, at the time, one peso. These coins were imprinted with the letters "G.C.R." for the national government. Paper peso and colón banknotes began to circulate in 1864 and 1896, respectively.

By the mid-1930s, after the establishment of the International Bank of Costa Rica, the country began to issue coins worth one colón and 25 and 50 centimos. These featured an imprint reading B.I.C.R.

Currency Evolution Under Costa Rica’s National Banking System

The National Bank of Costa Rica issued its coins in 1937 with a "B.N.C.R." imprint. In 1951, the Central Bank of Costa Rica (BCCR) assumed responsibility for all currency issues. The bank expanded the range of denominations to include 20, 100, and 500 colones coins.

A handful of other financial institutions issued banknotes over the first half of the 20th century until the BCCR became the sole issuer of the national currency.

Banknotes, as with coins, saw the range of denominations grow, and by 1997 they included 10,000 colón notes. The design for each denomination displays a portrait of a prominent Costa Rican on the front and a portrait of the country’s natural beauty and wildlife on the reverse.

Role of Costa Rica’s Central Bank

The Central Bank of Costa Rica (BCCR) manages national inflation and the colón's relationship to the U.S. dollar. Until 2006, the colón used a crawling peg system that maintained the exchange rate within a range deemed acceptable by the central bankers.

In January 2015, the bank announced the CRC would be allowed to float against the dollar and that the bank would intervene only in extraordinary circumstances.

Overview of Costa Rica’s Economic Landscape

The Republic of Costa Rica occupies a thin strip of land that borders Nicaragua and Panama. The country is a stable democracy, which is unusual for this area of the globe.

The Republic declared independence from Spanish rule in 1821, then from the First Mexican Empire in 1823, and finally from the Federal Republic of Central America in 1838. Final recognition of the nation's independence came in 1850.

Key Industries Driving Costa Rica’s Economy

Today, Costa Rica’s main industries include agriculture (in particular coffee, bananas, and pinneapples), tourism, and electrical exports, with the service industry making up about 66% of the country’s total GDP as of 2021.

The economy is as stable as the government. However, Costa Rica has a growing foreign debt and budget deficit. The Republic also has to cope with growing dollarization as local currency deposits in banks are replaced with foreign money.

Impact of Foreign Enterprises in Costa Rica

Costa Rica has a free trade zone, which has attracted many foreign companies. This tax-free area plays host to many businesses in the technology sector, including Dell, IBM, Intel, and HP. 

According to the 2023 World Bank data, the Republic of Costa Rica has a 2.7% annual gross domestic product (GDP) growth as of 2023, that is expected to grow to 3.1% in 2024 supported by Costa Rica’s dynamic exporting sectors.

The annual inflation rate in Costa Rica is as low as 0.88% (May 2023), the lowest since March 2021.

The Bottom Line

The Costa Rican colón (CRC) is the national currency of the Republic of Costa Rica, first issued in coin and paper form in 1896. The name "colón" comes from Christopher Columbus (Cristóbal Colón in Spanish). Banknotes currently circulating in Costa Rica come in denominations of 1,000, 2,000, 5,000, 10,000, and 20,000. Coins come in seven denominations: 500, 100, 50, 25, 10, 5, and 1 colón.

Visitors will find that the U.S. dollar is widely accepted for local transactions, although the colón is preferred, especially in small businesses.