MADEIRA ESCUDO

The former currency ofMadeira, an island off the coast ofPortugal. TheMadeira escudo was used as Madeira's currency until it adopted the euro along with Portugal on January 1, 2002.Madeira belongs toPortugal, but has been an autonomous region since 1976, meaning that it has its own government and legislature and can make its own decisions on regional matters. It has Portugal's second highest GDP afterLisbon andis a popular EU tourist destination, perhaps best known for its fortified wine production. The escudo was also the former official currency ofPortugal until the adoption of the euro.

Madeira along with Portgual adopted the euro to help facilitate trade among EU countries, eliminating the uncertainties imposed by fluctuating exchange rates and the need to exchange currencies before completing a transaction.

The euro also prevents individual EU member countries from inflating their currencies to eliminate government debt (though the EU central bank still has that power). Critics have pointed out that widespread implementation of the euro decreases currency competition, giving people fewer options for holding their money in a different currency when faced with wealth-eroding monetary policies such as inflation. Others have pointed out that widespread use of the euro could be followed by tax harmonization policies that would decrease tax competition among member states and stifle economic growth.