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Canadian dollar
The Canadian dollar, CAD or C$, is the unit of currency of Canada. One hundred cents (¢) add up to one dollar.
History
Canada decided to use the dollar instead of a pound sterling system because of the prevalence of Spanish dollars in North America in the 18th century and early 19th century and because of the standardization of the American dollar. The Canadas, in particular, favoured the dollar — the Bank of Montreal issued bank notes in dollars in 1817 — whereas the Atlantic colonies, with stronger ties to Britain and weaker ones to the United States, preferred the £.s.d. system. The Province of Canada declared that all accounts would be kept in dollars as of January 1, 1858, and ordered the issue of the first official Canadian dollars in the same year. The colonies that would come together in Canadian Confederation progressively adopted a decimal system over the next few years.
Finally, the government passed the Uniform Currency Act in April 1871, tying up loose ends as to the currencies of the various provinces and replacing them with a common Canadian dollar. The gold standard was temporarily abandoned during World War I, and definitively abolished on April 10, 1933.
Canadian currency
Canadians use coins and bills (called "bank notes" officially, but not in ordinary usage) of similar denominations to money in the United States. The historical sizes of the coins less than 50¢ are identical to those of U.S. coins due to both nations using the Spanish dollar as the basis of their money. Modest quantities of U.S. coinage circulate in Canada at par, and some Canadian coins (generally less than one-dollar) circulate in some places in the United States as well, though recent changes to the appearance and composition of Canadian coinage have made it more difficult for these coins to be used in the United States. In Canada, it is common to find U.S. 1¢, 5¢, 10¢, and 25¢ coins in circulation (just as there are Australian 5c, 10c and 20c coins in New Zealand and vice versa). This interchangeability led to some concern when the United States Mint decided that the new Sacagawea dollar coin would have the same colouring as the Canadian $1 coin, the "loonie", although this proved to be a non-issue.
Canadian English, like American English, uses the slang term "buck" for a dollar; the word "loonie" is also used to distinguish the Canadian dollar from other currencies, as in "The loonie performed well today on currency markets."
In French, the currency is also called le dollar; Canadian French slang terms include piastre or piasse (equivalent to "buck," but the original word used in eighteenth-century French to translate "dollar") and huard (equivalent to "loonie"), since huard is French for "loon", the animal appearing on the coin.
Creating currency: then and now
Canadian coins are issued by the Royal Canadian Mint and struck at their facilities in Winnipeg. Notes are issued by the Bank of Canada with the production of the bills being outsourced to the British American Bank Note Company Ltd and the Canadian Bank Note Company Ltd in accordance with the specifications and requirements of the Bank of Canada. All wording on bills appears in both Canada's official languages, English and French. The same applies to special wording on commemorative coins. All of the standard wording on the reverse sides of coins is identical in both languages. On the obverse sides, however, the name and title of Canada's monarch appear in an abbreviated-Latin circumscription. Currently, this reads "ELIZABETH II D. G. REGINA". The initials stand for "Dei Gratia"; the entire phrase means, "Elizabeth II, by the Grace of God, Queen".
Canadian coins were originally issued in bronze (1¢) and silver (5¢ up). Gold coins for circulation were issued from 1912 to 1914 only. In 1922, copying an earlier change in the United States, the 5¢ coin was enlarged and changed to nickel; unlike the United States, pure nickel was used except during World War II and the Korean War. A silver dollar coin similar to that issued in the United States was first proposed in 1911 and a few trial pieces exist (one of which is in a museum in Ottawa and the other sold to a private collector a few years ago for C$1.1 million), but a proper dollar coin did not arrive until 1935. The percentage of silver in silver coins was reduced in 1919 and 1967, and in 1968 they were all replaced by pure nickel coins of the same size or nearly so. The rising price of nickel eventually forced the 5¢ coin (commonly called the "nickel") to be changed to cupro-nickel in 1982.
At about the same time the 1¢ coin was twice made smaller, and in 1997 it was changed to copper-plated zinc. Finally, in 2000 all coins below $1 were changed to steel with copper or nickel plating. Unfortunately, there have been some problems with compatibility between the new coins and coin-operated devices like vending machines and public telephones. The 50¢ piece is regularly minted, but not in large quantities; it is very rare to come across this coin in circulation, although an unsuccessful attempt was made by the Mint to promote the use of the coin when a special edition was released in 2002 marking the 50th anniversary of Queen Elizabeth II ascending the throne.
Special edition coins
Queen Elizabeth II
Queen Elizabeth II
In recent years, the Mint has issued several series of coins with special reverses. Most of them have been 25¢ coins, particularly in the years 1999–2001. There were also versions of the $2 coin commemorating the founding of Nunavut, and another with a family of polar bears; there have been several variants of the $1 coin, one of which featured the Canadian peacekeepers' monument in Ottawa to commemorate the award of the Nobel Peace Prize. A commemorative Terry Fox $1 coin began circulating on April 4, 2005.
On October 21, 2004, the Royal Canadian Mint unveiled a [http://www.mint.ca/poppy/default.asp "25¢ poppy coin"]. This coin features a red-coloured poppy embedded in the centre of a maple leaf above a banner reading "Remember - Souvenir". While some countries' mints have produced colourized coins for market to collectors, this is the first colourized coin in general circulation in the world.
The Mint states that, with normal wear and tear, the colour should remain for a number of years, although this claim was quickly disproved. The colouration compounds are attached to the metal on a specially prepared 'dimpled' section of the coin, and seem to come off easily if deliberately rubbed. The coin will retain its full value even if the red poppy has worn off or been removed; however it is now expected that fully coloured specimens will become collectible in the future.
On May 4, 2005 the Mint unveiled a new "Victory nickel". Originally issued from 1943 to 1945, the original Victory nickel was designed to promote the Canadian war effort. The new coin commemorates the 60th anniversary of the Allied victory in World War II. Up to 60 million Victory nickels will be produced and treated as regular circulation coins.
Recently two new 25-cent coins commemorating the centennial of two of Canada's provinces were released: the coin for Alberta represents Canadian oil exploration; the coin for Saskatchewan depicts Canada's wheat fields. The Mint later issued a 2005 Year Of The Veteran coin to honour military veterans, also in the 25-cent denomination.
Recent changes in Canadian currency
As of fall 2004, the highest denomination coin minted in Canada is a $350 gold coin produced for the collector market, though the bullion values make its market value much higher than its face value.
The most significant recent developments in Canadian currency were the withdrawal of the $1 and $2 bills in 1987 and 1996, respectively, and their replacement with coins of new design. The new $1 coin, first issued in 1987, is colloquially called the "loonie," for the loon on its reverse, and the name is frequently applied to the currency unit as well. It is made of nickel plated with "aureate bronze". The $2 coin, carrying a polar bear, introduced in 1996, is called by analogy the "toonie" (also spelled "twonie", making the etymology clearer), and has two sections differing in colour. Unlike several U.S. attempts to introduce a dollar coin, the new coins were quickly accepted by the public, owing largely to the fact that the mint and government made it a "cold turkey" switch by removing the $1 and $2 bills from circulation.
Beginning in 2001, the Bank of Canada introduced a new series of bills: the new $10 was first issued on January 17, 2001; the new $5 on March 27, 2002; the new $100 bill on March 17, 2004, the new $20 on September 29, 2004, and the new $50 on November 17, 2004. Called "Canadian Journey", this series features elements of Canadian heritage and excerpts from Canadian literature. The $20, $50, and $100 notes introduce watermark security features for the first time on Canadian currency; they also boast significantly expanded holographic security features. All 2001 series notes also include the EURion constellation, on both sides of the bill. The new bills have a "tactile feature", which is a series of raised dots (but not in Braille) in the upper right corner on the obverse of each bill to aid the visually impaired in identifying currency denominations.
As part of its ongoing efforts to improve the security of Canadian bank notes, the Bank of Canada issued a $10 note with upgraded security features on 18 May, 2005.
The upgraded note has the same security features found on the $20, $50, and $100 Canadian Journey series notes issued in 2004. The improved features include a metallic holographic stripe, a watermark portrait, a windowed colour-shifting thread woven into the paper, a see-through number, and enhanced fluorescence under ultraviolet lighting. These features are reliable and quick and easy to use, and are designed to help Canadians protect themselves from accepting counterfeit notes. The illustrations on the front and back of the note are the same as those on the $10 note issued in 2001.
The Canadian government has occasionally considered the possibility of eliminating the 1¢ coin from circulation, though as of early 2005 no serious discussion has been undertaken about dropping the coin. Likewise reports, in the wake of the $2 coin's success, that Ottawa was considering a $5 coin to replace the bill have yet to be realized.
Specifications
image:canadian-coins.jpg
Canadians coins have medallic orientation, like British or Euro coins, and unlike U.S. coins which have coin orientation.
‡ Withdrawn from circulation. Currency withdrawn from circulation is still legal tender. As of early 2005, the 1986-series $5 and $10 bills are still occasionally encountered, but they are rapidly disappearing from regular use. Despite the introduction of new notes, the 1986 $20, $50, and $100 are still common. $1,000 bills are no longer printed, but are still used by banks and casinos occasionally.
All 1986 and 2001 series bills measure 152.4 mm by 69.85 mm (6 by 2¾ inches).
See also Withdrawn Canadian banknotes.
Canadian currency rumours
A number of urban legends have circulated regarding Canadian currency.
- An American flag is flying over the Parliament buildings on Canadian paper money. This is not the case. The Birds series bills depict a Union Jack flying over Parliament on the $100; a Canadian Red Ensign (a former Canadian flag) on the $5, $10, and $50; and the modern maple-leaf flag was on the $2 and $1000 bills. (The $20 depicts the Library of Parliament, with no flag visible.) When a bill depicts a past Prime Minister, the Parliament buildings behind him are flying whichever flag Canada was using at the time of his tenure; Borden is depicted with the Union Jack because of his wartime government. Where a bill depicts the Queen, the current flag is used. Those "taken" by the rumour were likely fooled by the bills with the Red Ensign, as the flags are not shown in full colour and the contrasting upper-hoist corner somewhat resembles the American flag.
- The new series $10 bill is being recalled because there is a misprint in the poem In Flanders Fields. The first line as printed, "In Flanders fields the poppies blow," startled many people, who believed the last word should be "grow". John McCrae wrote two versions which were both published, but his original manuscript, the one used by the government and widely used for Remembrance Day ceremonies, reads "blow", meaning to bloom. (The last two lines are, "We shall not sleep, though poppies grow/In Flanders fields.")
- You can pop the centre out of a toonie. This is (or was) in fact true. Many toonies in the first shipment of the coins were defective, and could separate if struck hard or frozen, as the centre piece would shrink more than the outside. This problem was quickly corrected, and the initial wave of "toonie popping" blew over a few months after the coin's introduction.
- The 50¢ piece is no longer minted and/or has been withdrawn from circulation. The 50¢ coin is indeed so rare that many people have never personally seen or handled one. Shop proprietors have been known to refuse to accept them as payment because they do not recognize them as Canadian currency. However, the mint continues to produce the 50¢ coin annually in small numbers; most of them are purchased by coin collectors. The remainder go to banks, though most do not give them out unless the customer specifically requests so. Given enough notice, any bank should be able to obtain them in a significant quantity for their customers. The 50¢ is also commonly handed out as regular change at Canada Post locations.
- The crown is wrong in the Queen's portrait. When the new coin portrait was first issued in 1990 (see above), a legend surfaced that the artist had simply added the image of a crown to a portrait of the Queen, and that she was never meant to be seen wearing that headgear. This is patently false; she posed personally for the portrait wearing one of her usual crowns.
- Canadian coins are minted in Regina, Saskatchewan. The expression D.G. Regina appears on the obverse of Canadian coins, leading to the (wrong) idea that the coins were minted in Regina. As noted, the Royal Canadian Mint branch in Winnipeg, Manitoba is responsible for minting Canadian circulation coinage. The expression D.G. Regina is Latin for by the grace of God, Queen, referring to the effigy of Elizabeth II. The city of Regina takes its name from the same Latin word, creating its nickname, "the Queen City." (Prior to the Winnipeg facility, all coins were minted at the Royal Canadian Mint in Ottawa, Ontario. The Ottawa branch mainly deals with numismatic and collector coins as well as bullion. Foreign circulation coins are handled at the Winnipeg Mint.)
"Canadian Journey" poems and quotes
- $5: The winters of my childhood were long, long seasons. We lived in three places—the school, the church, and the skating-rink—but our real life was on the skating-rink. (Roch Carrier)
- $10: In Flanders Fields the poppies blow / Between the crosses, row on row, / That mark our place, and in the sky / The larks, still bravely singing, fly / Scarce heard amid the guns below. (John McCrae 1872-1918)
- $20: Could we ever know each other in the slightest without the arts? (Gabrille Roy 1909-1983)
- $50: All human beings are born free and equal in dignity and rights (Universal Declaration of Human Rights)
- $100: Do we ever remember that somewhere above the sky in some child's dream perhaps Jacques Cartier is still sailing, always his way always about to discover a new Canada? (Miriam Waddington)
Value
Inflation in the value of the Canadian dollar has been fairly low since the 1990s, but had been severe for some decades before that.
Since about 85 per cent of Canada's external trade is with the United States, Canadians are mainly interested in the value of their currency against the United States dollar (USD). The Canadian dollar was more valuable than the USD for part of the 1970s, but has never regained that status. Since setting an all-time low of US$0.6179 on January 21, 2002, the dollar rallied through 2003, 2004 and 2005 reaching US$0.85 on November 26, 2004, US$0.86 on September 30, 2005, and US$0.87 on December 13 of the same year.
On world markets, the Canadian dollar tended historically to move in the same direction as the U.S. dollar, but less dramatically. A consequence is that at times an apparently rising Canadian dollar is often falling against most of the world's currencies, and vice versa. However, during the relatively sharp rise of the Canadian dollar mentioned above, it has "parted way" with the U.S. dollar and has gained value against it, while also rising against other major international currencies.
Although there was a great deal of domestic concern when the Canadian dollar was trading much lower than the U.S. dollar, there is also concern among exporters when the dollar appreciates quickly. The rapid rise in the value of the Canadian dollar increases the price of Canadian exports to the United States, which make up a large part of the economy. On the other hand, Canadian industry enjoys advantages from a rising dollar, primarily in that it is cheaper to purchase foreign material and businesses.
Current CAD exchange rates
[http://finance.yahoo.com/currency/convert?amt=1&from=AUD&to=CAD&submit=Convert AUD] |
[http://finance.yahoo.com/currency/convert?amt=1&from=EUR&to=CAD&submit=Convert EUR] |
[http://finance.yahoo.com/currency/convert?amt=1&from=GBP&to=CAD&submit=Convert GBP] |
[http://finance.yahoo.com/currency/convert?amt=1&from=INR&to=CAD&submit=Convert INR] |
[http://finance.yahoo.com/currency/convert?amt=1&from=NZD&to=CAD&submit=Convert NZD] |
[http://finance.yahoo.com/currency/convert?amt=1&from=USD&to=CAD&submit=Convert USD]
See also
- Where's Willy
- Royal Canadian Mint
External links
- [http://www.cdnpapermoney.com/ A site about Canadian currency]
- [http://finance.yahoo.com/q/bc?s=CADUSD=X&t=2y&l=on&z=l&q=l&c= A graph of the Canadian dollar's value in U.S. dollars over the past two years]
- [http://www.currencymuseum.ca/eng/collection/index.php History of the earliest forms currency in Canada]
- [http://www.bankofcanada.ca/en/rates/can_us_lookup.html Exchange Rate Lookup]
- [http://www.bankofcanada.ca/en/dollar_book/index.htm A History of the Canadian dollar]
- [http://www.bankofcanada.ca/en/banknotes/index.html Bank of Canada — bank notes]
- [http://www.mint.ca Royal Canadian Mint ]
- [http://www.whereswilly.com/ The Where's Willy? Currency Tracking Project]
Category:Economic history of Canada
Category:Currency of Canada
ja:カナダドル
Currency:For current exchange rates, see Exchange links.
A currency is a unit of exchange, facilitating the transfer of goods and services. It is a form of money, where money is defined as a medium of exchange (rather than e.g. a store of value). A currency zone is a country or region in which a specific currency is the dominant medium of exchange. To facilitate trade between currency zones, there are exchange rates i.e. prices at which currencies (and the goods and services of individual currency zones) can be exchanged against each other. Currencies can be classified as either floating currencies or fixed currencies based on their exchange rate regime. In common usage, currency sometimes refers to only paper money, as in "coins and currency", but this is incorrect. Coins and paper money are both forms of currency.
In most cases, each country has monopoly control over its own currency. Member countries of the European Monetary Union are a notable exception to this rule, as they have ceded control of monetary policy to the European Central Bank.
In cases where a country does have control of its own currency, that control is exercised either by a Central Bank or by a Ministry of Finance. In either case, the institution that has control of monetary policy is referred to as the monetary authority. Monetary authorities have varying degrees of autonomy from the governments that create them. In the United States, the Federal Reserve operates with full independence from the government. It is important to note that a monetary authority is created and supported by its sponsoring government, so independence can be reduced or revoked by the legislative or executive authority that creates it. In almost all Western countries, the monetary authority is largely independent from the government.
Several countries can use the same name, each for their own currency (e.g. Canadian dollars and US dollars), several countries can use the same currency (e.g. the euro), or a country can declare the currency of another country to be legal tender. For example, Panama and El Salvador have declared US currency to be legal tender, and from 1791-1857, Spanish silver coins were legal tender in the United States. At various times countries have either restamped foreign coins, or used currency board issuing one note of currency for each note of a foreign government held, as Ecuador currently does.
Each currency typically has one fractional currency, often valued at 1/100 of the main currency: 100 cents = 1 dollar, 100 centimes = 1 franc, 100 pence = 1 pound. Units of 1/10 or 1/1000 are also common, but some currencies do not have any smaller units. Mauritania and Madagascar are the only remaining countries that do not use the decimal system; instead, the Mauritanian ouguiya is divided into 5 khoum, while the Malagasy ariary is divided into 5 iraimbilanja. However, due to inflation, both fractional units have in practice fallen into disuse.
See Non-decimal currencies for other (mostly historic) currencies with non-decimal divisions.
History
Early Currency
The origin of currency is the creation of a circulating medium of exchange based on a store of value. Currency evolved from two basic innovations: the use of counters to assure that shipments arrived with the same goods that were shipped, and the use of silver ingots to represent stored value in the form of grain. Both of these developments had occurred by 2000 BC.
This first stage of currency, where metals were used to represent stored value, and symbols to represent commodities, formed the basis of trade in the Fertile Crescent for over 1500 years. However, the collapse of the Near Eastern trading system pointed to a flaw: in an era where there was no place that was safe to store value, the value of a circulating medium could only be as sound as the forces that defended that store. Trade could only reach as far as the credibility of that military.
Coinage
These factors led to the shift of the store of value being the metal itself: at first silver, then both silver and gold. Metals were mined, weighed, and stamped into coins. This was to assure the individual taking the coin that he was getting a certain known weight of precious metal. Coins could be counterfeited, but they also created a new unit of account, which helped lead to banking. It was with Archimedes' principle that the next link in currency occurred: coins could now be easily tested for their fine weight of metal, and thus the value of a coin could be determined, even if it had been shaved, debased or otherwise tampered with. (See Coinage).
In most major economies using coinage, copper, silver and gold formed three tiers of coins. Gold coins were used for large purchases, payment of the military and backing of state activities. Silver coins were used for large, but common, transactions, and as a unit of account for taxes, dues, contracts and fealty, while copper coins represented the coinage of common transaction. In Europe this system worked through the medieval period because there was virtually no new gold, silver or copper introduced through mining or conquest. Thus the overall ratios of the three coinages remained roughly equivalent.
In China, however, the need for credit and for circulating medium led to the introduction of paper money. In Europe paper money was first introduced in Sweden 1661. Sweden was rich on copper but because of copper's low value extraordinarily big coins had to be made. It was probably more convenient to have a note stating your possession of such a coin.
The Era of Hard and Credit Money
Paper money was, in one sense, a return to the oldest form of currency: it represented a store of value backed by the credibility of the issuing authority. Drafts and checks issued privately had been in intermittent use for centuries, however, it was with the rise of global trade that paper money would find a permanent place in currency.
The advantages of paper currency were numerous: it reduced transport of gold and silver, and thus lowered the risks; it made loaning gold or silver at interest easier, since the specie (gold or silver) never left the possession of the lender until someone else redeemed the note; and it allowed for a division of currency into credit and specie backed forms. It enabled the sale of stock in joint stock companies, and the redemption of those shares in paper.
However, these advantages held within them disadvantages. First, since a note has no intrinsic value, there was nothing to stop issuing authorities from printing more of it than they had specie to back it with. Second, because it created money that did not exist, it was subject to Gresham's Law: people would exchange money rather than coins of the same value, and this increased the velocity of money and therefore increased inflationary pressures, a fact observed by David Hume in the 18th century. The result is that paper money would often lead to an inflationary bubble, which would then collapse when the demand for paper notes fell to zero, and people began demanding hard money. The printing of paper money was also associated with wars, and financing of wars, and therefore regarded as part of maintaining a standing army.
For these reasons, paper currency was held in suspicion and hostility in Europe and America. It was also addictive, since the speculative profits of trade and capital creation were quite large. Major nations established mints to print money and mint coins, and branches of their treasury to collect taxes and hold gold and silver stock.
Legal Tender Era
With the creation of central banks, currency underwent several significant changes. During both the coinage and credit money eras the number of entities which had the ability to coin or print money was quite large. One could, literally, have "a license to print money"; many nobles had the right of coinage. Royal colonial companies, such as the Massachusetts Bay Company or the British East India Company could issue notes of credit—money backed by the promise to pay later, or exchangeable for payments owed to the company itself. This led to continual instability of the value of money. The exposure of coins to debasement and shaving, however, presented the same problem in another form: with each pair of hands a coin passed through, its value grew less.
The solution which evolved beginning in the late 18th century and through the 19th century was the creation of a central monetary authority which had a virtual monopoly on issuing currency, and whose notes had to be accepted for "all debts public and private". The creation of a truly national currency, backed by the government's store of precious metals, and enforced by their military and governmental control over an area was, in its time, extremely controversial. Advocates of the old system of Free Banking repealed central banking laws, or slowed down the adoption of restrictions on local currency. (See Gold standard for a fuller discussion of the creation of a standard gold based currency).
At this time both silver and gold were considered legal tender, and accepted by governments for taxes. However, the instability in the ratio between the two grew over the course of the 19th century, with the increase both in supply of these metals, particularly silver, and of trade. This is called bimetallism and the attempt to create a bimetallic standard where both gold and silver backed currency remained in circulation occupied the efforts of inflationists. Governments at this point could use currency as an instrument of policy, printing paper currency such as the United States Greenback, to pay for military expenditures. They could also set the terms at which they would redeem notes for specie, by limiting the amount of purchase, or the minimum amount that could be redeemed.
By 1900, most of the industrializing nations were on some form of gold standard, with paper notes and silver coins constituting the circulating medium. Governments too followed Gresham's Law: keeping gold and silver paid, but paying out in notes.
The Paper Money Era
See the history of paper money.
Modern currencies
To find out which currency is used in a particular country, start at the countries of the world or look at the table of historical exchange rates.
Nowadays ISO have introduced a system, ISO 4217, using three-letter codes to define currency (as opposed to simple names or currency signs), in order to remove the confusion that there are dozens of currencies called the dollar and many called the franc. Even the pound is used in nearly a dozen different countries, all, of course, with wildly differing values. In general, the three-letter code uses the ISO 3166-1 country code for the first two letters and the first letter of the name of the currency (D for dollar, for instance) as the third letter.
The International Monetary Fund uses a variant system when referring to national currencies.
:For exchange rates, see here.
See Non-decimal currencies
Currency names
Currency names of the world in alphabetic order by currency name:
A-E
- Afghani - Afghanistan
- Ariary - Madagascar
- Baht - Thailand
- Balboa - Panama (U.S. dollar used for paper money)
- Birr - Ethiopia
- Bolívar - Venezuela
- Boliviano - Bolivia
- Cedi - Ghana
- Colón - Costa Rica
- Córdoba - Nicaragua
- Dalasi - The Gambia
- Denar - Macedonia
- Dinar
- Algerian dinar - Algeria
- Bahraini dinar - Bahrain
- Iraqi dinar - Iraq
- Jordanian dinar - Jordan, Palestine
- Kuwaiti dinar - Kuwait
- Libyan dinar - Libya
- Tunisian dinar - Tunisia
- Serbian dinar - Serbia
- Sudanese dinar - Sudan
- Dirham
- Moroccan dirham
- United Arab Emirates dirham
- Dobra - São Tomé and Príncipe
- Dollar
- Australian dollar - Australia, Christmas Island, Cocos (Keeling) Islands, Heard Island and McDonald Islands, Norfolk Island, Kiribati, Nauru and Tuvalu
- Barbados dollar - Barbados
- Bahamian dollar - Bahama
- Belize dollar - Belize
- Bermuda dollar - Bermuda
- Brunei dollar - Brunei
- Canadian dollar - Canada
- Cayman Islands dollar - Cayman Islands
- East Caribbean dollar - Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines
- Fijian dollar - Fiji
- Guyanese dollar - Guyana
- Hong Kong dollar - Hong Kong
- International dollar - hypothetical currency pegged 1:1 to the United States dollar
- Jamaican dollar - Jamaica
- Liberian dollar - Liberia
- Namibian dollar - Namibia
- New Zealand dollar - New Zealand, Cook Islands, Niue, Tokelau, Pitcairn Islands.
- Singapore dollar - Singapore
- Solomon Islands dollar - Solomon Islands
- Suriname dollar - Suriname
- New Taiwan dollar - Taiwan
- Trinidad and Tobago dollar - Trinidad and Tobago
- Tuvaluan dollar - Tuvalu (not an independent currency, equivalent to Australian dollar)
- United States dollar - United States of America; also used officially in several other countries: East Timor (has own centavo coins), Ecuador (has own centavo coins), El Salvador, Marshall Islands, Federated States of Micronesia, Palau and Panama (has own Balboa currency)
- Zimbabwe dollar - Zimbabwe
- Dong - Vietnam
- Dram - Armenia
- Escudo - Cape Verde
- Euro - Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain
- Countries that have made legal agreements with the EU to use the euro: Monaco, San Marino, Vatican City
- Territories that unilaterally use the euro: Andorra, Montenegro, Kosovo
- Currencies pegged to the euro: Cape Verdean escudo, CFA franc, CFP franc, Comorian franc, Bulgarian lev, Estonian kroon, Lithuanian litas, Bosnia and Herzegovina convertible mark
F-M
- Florin - Aruba
- Forint - Hungary
- Franc
- CFA franc - Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Côte d'Ivoire, Republic of the Congo, Equatorial Guinea, Gabon, Guinea-Bissau, Mali, Niger, Senegal, Togo
- CFP franc - New Caledonia, French Polynesia, Wallis and Futuna
- Comorian franc - Comoros
- Congolese franc - Democratic Republic of Congo (replaced in 1967, re-established in 1998)
- Burundi franc - Burundi
- Rwandan franc - Rwanda
- Djiboutian franc - Djibouti
- Guinean franc - Guinea (replaced in 1971, re-established in 1985)
- Malagasy franc - Madagascar (replaced by Ariary in 2004)
- Swiss franc - Switzerland, Liechtenstein.
- Gourde - Haiti
- Guaraní - Paraguay
- Gulden - Netherlands Antilles
- Hryvnia - Ukraine
- Kina - Papua New Guinea
- Kip - Laos
- Koruna
- Czech koruna - Czech Republic
- Slovak koruna - Slovakia
- Kroon - Estonia
- Króna
- Faroese króna (not an independent currency, equivalent to Danish krone)
- Icelandic króna
- Krona - Sweden
- Krone
- Danish krone - Denmark, Greenland
- Norwegian krone - Norway
- Kuna - Croatia
- Kwacha
- Malawian kwacha - Malawi
- Zambian kwacha - Zambia
- Kwanza - Angola
- Kyat - Myanmar
- Lat - Latvia
- Lari - Georgia
- Lek - Albania
- Lempira - Honduras
- Leone - Sierra Leone
- Leu
- Moldovan leu - Moldova
- Romanian leu - Romania
- Lev - Bulgaria
- Lilangeni - Swaziland
- Lira
- Maltese lira - Malta
- Turkish new lira - Turkey
- Litas - Lithuania
- Loti - Lesotho
- Manat
- Azeri manat - Azerbaijan
- Turkmenistani manat - Turkmenistan
- Mark, convertible - Bosnia and Herzegovina
- Metical - Mozambique
N-R
- Nakfa - Eritrea
- Naira - Nigeria
- Ngultrum - Bhutan
- Ouguiya - Mauritania
- Pa'anga - Tonga
- Pataca - Macau
- Peso
- Argentine peso - Argentina
- Chilean peso - Chile
- Colombian peso - Colombia
- Cuban peso, Cuban convertible peso - Cuba
- Dominican peso - Dominican Republic
- Mexican peso - Mexico
- Philippine peso - Philippines
- Uruguayan peso - Uruguay
- Pound
- Cyprus pound - Cyprus
- Egyptian pound - Egypt
- Falkland pound - Falkland Islands
- Gibraltar pound - Gibraltar
- Saint Helenian pound - Saint Helena
- (New) Sudanese pound - Southern Sudan
- Lebanese pound - Lebanon
- Pound sterling - United Kingdom
- Syrian pound - Syria
- Pula - Botswana
- Quetzal - Guatemala
- Rand - South Africa
- Real - Brazil
- Renminbi - People's Republic of China
- Rial
- Iranian rial - Iran
- Omani rial - Oman
- Yemeni rial - Yemen
- Riel - Cambodia
- Ringgit - Malaysia
- Riyal
- Qatari riyal - Qatar
- Saudi riyal - Saudi Arabia
- Ruble
- Belarusian ruble - Belarus
- Russian ruble - Russia
- Transnistrian ruble - Transnistria (non-recognized currency)
- Rufiyah - Maldives
- Rupee
- Indian rupee - India
- Mauritian rupee - Mauritius
- Nepalese rupee - Nepal
- Pakistani rupee - Pakistan
- Seychelles rupee - Seychelles
- Sri Lankan rupee - Sri Lanka
- Rupiah - Indonesia
S-Z
- Sheqel - Israel, Gaza Strip, West Bank
- Shilling
- Kenyan shilling - Kenya
- Somali shilling - Somalia
- Tanzanian shilling - Tanzania
- Ugandan shilling - Uganda
- Sol - Peru
- Som
- Kyrgyzstani som - Kyrgyzstan
- Uzbekistani som - Uzbekistan
- Somoni - Tajikistan
- Taka - Bangladesh
- Tala - Samoa
- Tenge - Kazakhstan
- Tolar - Slovenia
- Tugrug - Mongolia
- Vatu - Vanuatu
- Won
- North Korean won - North Korea
- South Korean won - South Korea
- Japanese yen - Japan
- Złoty - Poland
Privately-issued currencies
From the earliest times token coins were issued by companies in remote parts of the world to overcome the shortage of circulating currency.
Several large companies issue points to their customers, to be redeemed for products and services produced by that company. Often, a network of companies will join to share in the offering and redemption of points. While these can hardly be considered stable currency systems, they present many of the same features as "legitimate" currency: they are a store of value, issued in discrete units; they are controlled by a central issuing authority; and they have varying rates of exchange with other forms of currency. For example, frequent flyer miles can be bought using U.S. dollars.
- Frequent Flyer Miles: A type of private currency, different versions of which are issued by most major airlines to encourage customer loyalty. Other customer loyalty incentives have followed this model, including points systems offered by soft drink manufacturers such as PepsiCo. Subway tokens, issued by city transit authorities, can be considered a highly specialized form of currency.
- E-gold: Privately issued digital currency backed by gold
- Scrip: A type of private currency where a certain value is captured, and used to purchase goods from a company. Examples of scrip include gift certificates, gift cards, and Disney Dollars or Canadian Tire Money. However, scrip is not considered a currency in itself, but merely a store of value, denominated in another currency.
- Liberty Dollar: A currency backed by silver, with a one-to-one exchange rate with the U.S. Dollar.
Local currencies
In economics, a local currency is a currency not backed by a national government, and intended to trade only in a small area. Advocates such as Jane Jacobs argue that this enables an economically depressed region to pull itself up, by giving the people living there a medium of exchange that they can use to exchange services and locally-produced goods (In a broader sense, this is the original purpose of all money.) Opponents of this concept argue that local currency creates a barrier which can interfere with economies of scale and comparative advantage, and that in some cases they can serve as a means of tax evasion.
Local currencies can also come into being when there is economic turmoil involving the national currency. An example of this is the Argentine economic crisis of 2002 in which IOUs issued by local governments quickly took on some of the characteristics of local currencies.
see: local currency also called community currency
World currency
With such developments as the Euro allowing for facilitated trade and perhaps a corresponding increase in a wider identity, proposals for a global currency have accelerated, even while it is recognized that several political and economic factors would need to be addressed and intermediate steps taken before such a concept might be accepted by the diverse nations of the world.
See also
- ISO 4217 Currency codes
Historic Currencies
Ancient Greece
- Drachma
Ancient Rome
- Antoninianus
- As
- Denarius
- Dupondius
- Sestertius
Africa
- Dollar - Rhodesia
- Escudo
- Mozambican escudo - Mozambique
- São Tomé and Príncipe escudo - São Tomé and Príncipe
- Ekwele (Ekuele) - Equatorial Guinea
- Florin - Kenya, Somalia, Tanzania and Uganda
- Franc
- Moroccan franc
- Malagasy franc
- Metica - Mozambique
- Peseta - Equatorial Guinea
- Peso - Guinea Bissau
- Pound
- Gambian pound - Gambia
- Ghanaian pound - Ghana
- Libyan pound - Libya
- Malawian pound - Malaŵi
- Nigerian pound - Nigeria
- Rhodesian pound - Rhodesia
- South African pound - South Africa
- Sudanese pound - Sudan
- West African pound - Cameroon, Gambia, Ghana, Nigeria and Sierra Leone
- Rial - Morocco
- Rupee - Kenya, Somalia, Tanzania and Uganda
- Shilling - Kenya, Somalia, Tanzania and Uganda
- Somalo - Somalia
- Syli - Guinea
- Zaire - Zaire
America
- Austral - Argentina
- Colón - El Salvador
- Continental Currency - Colonial America
- Cruzeiro, Cruzado - Brazil
- Escudo - Chile
- Gulden - Suriname
- Inti - Peru
- Peso
- Bolivian peso
- Costa Rican peso
- Guatamalan peso
- Honduran peso
- Nicaraguan peso
- Paraguayan peso
- Scudo - Bolivia
- Sucre - Ecuador
- Trade dollar - United States of America
Asia
- Dollar - Mongolia
- Hwan - Korea
- Lira - Turkey
- Mohar - Nepal
- Pound - Israel
- Rixdollar - Sri Lanka
- Ruble - Tajikistan
- Rupee
- Gulf rupee - Bahrain, Kuwait, Oman, Qatar and UAE
- Burmese rupee - Burma
- Tael - China
Australasia
- Pound
- Australian pound
- New Zealand pound
Europe
- 14 national currencies which were replaced by the Euro in 2002:
- Austrian schilling
- Belgian franc
- Dutch gulden
- Finnish markka
- French franc
- German mark
- Greek drachma
- Irish pound
- Italian lira
- Luxemburgese franc
- Portuguese escudo
- San Marinese lira
- Spanish peseta
- Vatican lira
- Daler
- Rigsdaler - Denmark and Norway
- Rijkdaalder - Netherlands
- Riksdaler - Sweden
- Speciedaler - Norway
- Dinar
- Bosnia and Herzegovina dinar
- Croatian dinar
- Yugoslav dinar
- Florin - Austria
- Gulden
- Austro-Hungarian gulden - Austria-Hungary
- Danzig gulden - Danzig
- South German gulden - Baden, Bavaria, Frankfurt, Hohenzollern, Württemberg and other states
- Karbovanets - Ukraine
- Koruna - Slovakia (Second World War)
- Lira - Turkey
- Marka - Poland
- Real
- Spanish real (plural reales)
- Portuguese real (plural réis)
- Rubłi - Latvia
- Perper
- Serbian perper
- Montenegrin perper
- Scudo
- Italian scudo - Lombardy-Venetia, Modena and Papal States
- Maltese scudo - Malta
- Peso - Spain
- Talonas - Lithuania
- Thaler - Germany, Austria, Hungary
- Conventionsthaler
- Reichsthaler
- Vereinsthaler
Accounting units
- Franc Poincaré
- Special Drawing Rights
- European Currency Unit
- Currency sign
- Krugerrand
- Fictional currency
- Local currencies
- Petrocurrency
- Currency Pair
Proposed Currencies
- Eco
- Perun
Lists
- List of currencies
- List of motifs on banknotes
- List of international trade topics
- List of historical exchange rates
External links
- [http://dictionary.reference.com/search?q=currency Table of currencies (from dictionary.com)]
- [http://www.tokencoins.com The early currencies of Southern Africa]
- [http://aes.iupui.edu/rwise/ Ron Wise's World Paper Money Homepage]
- [http://ostermiller.org/calc/currency.html Currency exchange rate conversion calculator] from ostermiller.org
- [http://tokyoahead.com/main/staticpages/index.php/chart2 Historical Currency Charts, Matrix & Converter]
- [http://haas.ca/articles/20040311-currency.cfm Minting New Security]
- [http://www.ratesfx.com/resources/currency.html Currency resources on the net]
- http://www.banknotes.com
- http://www.banknoteworld.com
- [http://www.forexpower.info Foreign Currency Trading Articles]
- [http://www.rebelstatescurrency.com/ Currency issued by the individual States of the Confederacy during the American Civil War]
- [http://www.monetary-unit.com/ Ad-Free website on worldwide currencies with short Descrption and Pictures]
Records
- [http://tomchao.com/trivia.html A site compiling information on cu
Cent (currency)]]
]]
In currency, the cent is a monetary unit that equals th of the basic unit of value. It also refers to the coin which is worth one cent. In the United States and Canada, the 1¢ coin
is generally known by the nickname penny, alluding to the
British coin and unit of that name.
Etymologically, the word cent derives from the Latin word centum which means hundred. Mints all over the world usually create coins with values ranging from th to th of the monetary unit, while reserving banknotes for higher values. However, coins with a th or th value are not uncommon, especially in cases of commemorative coinage. Many countries have pulled banknotes of a th value out of circulation and replaced them with coins.
Cent amounts between 1 and 99 cents are usually indicated by the one or two digits followed by a lower-case letter c (1c, 2c), or by a cent sign which is usually pierced top to bottom by a forward slash or a vertical line: ¢ (e.g., 1¢, 2¢). In Australia and New Zealand, the first usage is more common, while in the United States and Canada, the second usage is more common.
Other monetary unit subdivision systems are possible, such as the old pound sterling, which until decimalisation in 1971 was subdivided into ths (shillings - s) and ths (old pence - d).
Examples of currencies around the world featuring cents, or related words from the same root such as centavo, centimo, centesimo, sen, are:
- Argentine peso - divided into 100 centavos
- Australian dollar - divided into 100 cents
- Brazilian real - divided into 100 centavos
- European Monetary Union euro - the coins bear the text EURO CENT; actual usage varies depending on language. Greek coins have "ΛΕΠΤΟ" ("lepto") on the obverse of the 1c coin and "ΛΕΠΤΑ" ("lepta") on the obverse of the others.
- Hong Kong dollar - divided into 100 cents (the smallest division in circulation is 10 cents)
- Latvian lat - divided into 100 santims
- Malaysian ringgit - divided into 100 sen
- Mexican peso - divided into 100 centavos
- New Zealand dollar - divided into 100 cents
- Philippine peso (piso) - divided into 100 centavos (sentimos)
- Singapore dollar - divided into 100 cents
- South African rand - divided into 100 cents
- Sri Lankan rupee - divided into 100 cents
- United States dollar - divided into 100 cents
Examples of currencies which do not feature cents
- Japanese yen - the yen in modern times doesn't feature any subdivision of the monetary unit
- Chilean peso - was divided into 100 cents until 1984. Since then, the peso doesn't feature any subdivisions
- Kuwaiti dinar - divided into 1000 fils
- Mauritanian ouguiya - divided into 5 khoums
- Malagasy ariary - divided into 5 iraimbilanja
- Serbian dinar - divided into 100 paras
- Vietnamese dong - No longer subdivided
Category:Currency
Category:numismatics
Pound sterling:GBP redirects here. For other uses, see GBP (disambiguation).
:For details of notes and coins, see British coinage and British banknotes.
The pound sterling is the official currency of the United Kingdom (UK). It is often simply called the pound, with "pound sterling" used mainly in formal contexts or when it is necessary to distinguish the unit of currency from others that have the same name (the term British pound is also often used for this purpose). The slang term quid is very common in the UK. The currency in general is sometimes called just sterling (e.g. "payment must be in sterling").
The pound was originally the value of one pound (weight) of sterling silver (hence "pound sterling"). The sign for the pound is the pound sign, £ (or rarely just "L"). Both symbols derive from libra, the Latin word for "pound". The ISO 4217 currency code is GBP (Great Britain Pound). Occasionally the abbreviation UKP is seen, but this is incorrect.
The pound sterling is one of the world's most widely traded currencies, along with the United States dollar, the euro, and the Japanese yen.
Subdivisions
yen, 5p, 10p, 20p, 50p, £1, £2]]
£2
£2
One pound is divided into 100 pence, the singular of which is "penny". The symbol for the penny is "p"; hence an amount such as 50p is often pronounced "fifty pee" rather than "fifty pence".
Prior to decimalisation in 1971, each pound was divided into 240 pence — although it was usually expressed as being divided into twenty shillings, with each shilling equal to twelve pence. The symbol for the shilling was "/" or "s" — not from the first letter of the word, but rather from the Latin word solidus. The symbol for the penny was "d", from the French word denier, which in turn was from the Latin word denarius. (The solidus and denarius were Roman coins.) The multiples involved in the pre-decimal currency were such that amounts such as a pound or a shilling had many factors into which they could be exactly divided. However, as these monetary amounts decreased in spending power, and their subdivision therefore became a less important issue, it was decided instead to introduce decimal currency in order to simplify arithmetic.
After Decimal Day, the value of one penny was therefore different from its pre-decimalisation value. For the first few years after 1971, the new type of penny was commonly referred to as a "new penny". Coins for denominations of ½p, 1p, 2p, 5p, 10p and 50p all bore the name NEW PENCE (or NEW PENNY) until 1982, when the inscription changed to HALF PENNY, ONE PENNY, TWO PENCE, FIVE PENCE and so on. The old 1/ and 2/ coins were equivalent in value to 5p and 10p respectively, and as such these coins remained valid within the decimal system until the 5p and 10p coins were each later replaced with smaller versions in the early 1990s.
Legal tender and regional issues
Laws of legal tender are uniquely complex in the UK. In England and Wales, banknotes issued by the Bank of England are legal tender, meaning that they must be accepted in payment of a debt. In Scotland and Northern Ireland, no banknotes are legal tender, and each bank which issues banknotes does so in the form of its own 'promissory notes'. Scottish and Northern Irish notes are sometimes rejected by shops when used in England. Scottish and Northern Irish notes' designs are also different from the English notes' designs. The one pound coin also has many varied designs on the reverse side, which differ from year to year with new designs appearing; however, all of these are Royal Mint coins and of equivalent legality.
The nature of legal tender is even more restricted in Scotland — only Royal Mint coins are legal tender, and even then the use of smaller coins is limited (the five and ten pence coins are only legal tender to a value of five pounds, for example). However, one and two pound coins are legal tender to an indefinite amount. This was not always the case, as during World War II the Scottish banknotes were made legal tender by the Currency (Defence) Act 1939; this status was withdrawn on January 1 1946.
To further complicate matters, some notes of the Bank of England were until recently legal tender in Scotland and Northern Ireland. This status only applied to notes under a value of five pounds, so following the withdrawal of the Bank of England one pound note in 1985, no circulating notes were covered by this clause.
All commonly circulating British coins are legal tender throughout the UK, as are the rarely seen five pound and twenty-five pence ("crown") coins. Several gold coins issued by the Mint are still legal tender, though as they have a bullion value far greater than their face value they are never used in circulation and tend to be kept by collectors.
Gibraltar and the islands of Guernsey, Jersey, Saint Helena, the Falkland Islands and the Isle of Man, which are not part of the United Kingdom, also issue their own currencies, which are fixed to the value of sterling. None of the regional currencies are legal tender in England or in other regions, but they are commonly accepted by large businesses and banks, or are sometimes accepted unknowingly- for example, many vending machines cannot distinguish between British coins and those from outside the UK. An exchange commission may be charged if used at a bank or a large business.
Such currencies tied to the Pound Sterling are known as sterling zone currencies. During the late nineteenth to mid-twentieth centuries, a large number of British dominions and colonies were members of the sterling zone.
:See : British banknotes, Isle of Man pound, Guernsey Pound, Jersey pound, Gibraltar pound, Falkland pound, Saint Helenian pound
Value against other currencies
The pound is now freely bought and sold on the foreign exchange markets around the world, and its value relative to other currencies therefore fluctuates (rising when traders buy pounds, falling when traders sell pounds). It has traditionally been among the highest-valued of all base currency units in the world.
- Historic exchange rates (since 1990) are given at Economy of the United Kingdom#Exchange rates
- Current wholesale exchange rates between sterling and other currencies can be viewed [http://moneycentral.msn.com/investor/market/rates.asp?Region=0&Compare=3 here].
History
Before sterling
- In Anglo-Saxon times, small silver coins known as sceats were used in trade: these were derived from Frisian examples, and weighed about 20 grains (c. 1.3 g).
- King Offa of Mercia c. AD 790 introduced a silver penny of 22.5 grains (c. 1.5 g). Two hundred and forty of these were made from a measure of silver known as the Tower pound: apparently it nominally weighed 5400 grains (c. 349.9 g).
- In 1526 the standard was changed to the Troy pound of 5764 grains (373.242 g).
- See also Saxon pound
Sterling
As a unit of currency, the term pound originates from the value of a troy pound of high purity silver known as sterling silver.
Sterling (with a basic currency unit of the Tealby penny, rather than the pound) was introduced as the English currency by King Henry II in 1158, though the name sterling wasn't acquired until later. The word sterling is from the Old French esterlin transformed in stiere in Old English (strong, firm, immovable).
The sterling was originally a name for a silver penny of 1/240 pound. Originally a silver penny had the purchasing power of slightly less than a modern pound. In modern times the pound has replaced the penny as the basic unit of currency as inflation has steadily eroded the value of the currency.
The pound sterling, established in 1560–61 by Elizabeth I and her advisors, foremost among them Sir Thomas Gresham, brought order to the financial chaos of Tudor England that had been occasioned by the "Great Debasement" of the coinage, which brought on a debilitating inflation during the years 1543–51. By 1551, according to Fernand Braudel (Braudel 1984, pp 356ff), the silver content of a penny had dropped to one part in three. The coinage had become mere fiduciary currency (as modern coins are), and the exchange rate in Antwerp where English cloth was marketed to Europe, had deteriorated. All the coin in circulation was called in for reminting at the higher standard, and paid for at discounted rates.
The pound sterling maintained its intrinsic value — "a fetish in public opinion" Braudel called it — uniquely among European currencies, even after the United Kingdom officially adopted the gold standard, until after World War I, weathering financial crises in 1621, in 1694–96, when John Locke pamphleteered for the pound sterling as "an invariable fundamental unit" and again in 1774 and 1797. Not even the violent disorders of the Civil War devalued the pound sterling in European money markets. Braudel attributes to the fixed currency, which was never devalued over the centuries, England's easy credit, security of contracts and rise to financial superiority during the 18th century. The pound sterling has been the money of account of the Bank of England from its inception in 1694.
The gold standard
Sterling unofficially moved to the gold standard from silver thanks to an overvaluation of gold in England that drew gold from abroad and occasioned a steady export of silver coin, in spite of a re-evaluation of gold in 1717 by Sir Isaac Newton, Master of the Royal Mint. The de facto gold standard continued until its official adoption following the end of the Napoleonic Wars, in 1816 (Braudel, p. 361). This lasted until Britain, in common with many other countries, abandoned the standard after World War I in 1919. During this period, the pound was generally valued at around US$4.90.
Discussions took place following the 1865 International Monetary Conference in Paris concerning the possibility of the UK joining the Latin Monetary Union, and a Royal Commission on International Coinage examined the issues [http://www.gold.org/value/reserve_asset/history/monetary_history/vol2/1868feb18.html]. Although the UK decided against joining, some of the arguments [http://www.oup.co.uk/pdf/0-19-924366-2.pdf] make interesting reading in the context of the current debate on the adoption of the euro.
Prior to World War I, the United Kingdom had one of the world's strongest economies, holding 40 per cent of the world's overseas investments. However, by the end of the war the country owed £850 million, mostly to the United States, with interest costing the country some 40 per cent of all government spending.
In an attempt to resume stability, a variation on the gold standard was reintroduced in 1926, under which the currency was pegged to the gold price at pre-war levels, although people were only able to exchange their currency for gold bullion, rather than for coins. This was abandoned on September 21, 1931, during the Great Depression, and sterling devalued 20 per cent.
In common with all other world currencies, there is no longer any link to precious metals. The U.S. dollar was the last to leave gold, in 1971. The pound was made fully convertible in 1946 as a condition for receiving a U.S. loan of US$3.75 billion in the aftermath of World War II.
Pound sterling was used as the currency of the British Empire. As this became the Commonwealth of Nations, dominions introduced their own currencies (such as the Australian pound and Irish pound) - first pegged to sterling, and later breaking parity (Australia in 1931 and Ireland in 1979).
Following the U.S. dollar
Since leaving gold, there have been several attempts to peg the value of the pound to other currencies, initially the U.S. dollar.
Under continuing economic pressure, and despite months of denials that it would do so, on September 19, 1949, the government devalued the pound by 30 percent, from US$4.03 to US$2.80. (The U.S. dollar itself was derived from a 5 shilling coin used in the American colonies in the 1700s, hence the value of US$4 per pound sterling in use until then.) The move prompted several other governments to devalue against the dollar too, including Australia, Denmark, Ireland, Egypt, India, Israel, New Zealand, Norway and South Africa.
In the mid-1960s the pound came under renewed pressure since the exchange rate against the dollar was considered too high. In the summer of 1966, with the value of the pound falling in the currency markets, exchange controls were tightened by the Wilson government. Among the measures, tourists were banned from taking more than £50 out of the country, until the restriction was lifted in 1970. The pound was eventually devalued by 14.3 percent to US$2.41 in November 1967.
With the break down of the Bretton Woods system – not least because British currency dealers created a substantial Eurodollar market – the pound was floated in the early 1970s and so subject to a market valuation.
A further crisis followed in 1976, when it was apparently leaked that the International Monetary Fund (IMF) thought that the pound should be set at US$1.50, and as a result the pound fell to $1.57, and the government decided it had to borrow £2.3 billion from the IMF. In the early 1980s the pound moved above the $2 level as interest rates rose in response to the monetarist policy of targeting money supply and a high exchange rate was widely blamed for the deep recession of 1981. At its lowest, the pound stood at just US$1.05 in February 1985, before returning to US$1.66 during the 1990s. In late 2004, the pound was worth US$1.94, but has fallen to mid-$1.70s as of July, 2005.
Decimalisation
See main article: Decimalisation Day.
Following the German mark
In 1988, Margaret Thatcher's Chancellor Nigel Lawson decided that the pound should "shadow" the West German Deutsche Mark, with the unintended result of a rapid rise in inflation as the economy boomed due to inappropriately low interest rates.
Following the European currency unit
In another change of tack, in 1990 the Thatcher government decided to join the European Exchange Rate Mechanism (ERM), with the pound set at about DM 2.90. However, the country was forced to withdraw from the system on Black Wednesday (September 16, 1992) as an international group of currency speculators led by George Soros exploited the fixed exchange rate by speculating on the interest rate differences between Britain and Germany (earning several billion dollars in the process).
Black Wednesday saw interest rates jump from 10 percent, to 12 percent, and then finally to 15 percent in a futile attempt to stop the pound from falling below the ERM limits. The exchange rate fell to DM 2.20 costing the country tens of billions of pounds.
Following inflation targets
In 1997, the newly elected Labour government caused a surprise when Gordon Brown handed over day to day control of interest rates to the Bank of England. The bank is now responsible for setting its base rate of interest so as to keep inflation at 2%. The target is symmetrical.
The euro
As a member of the European Union, the United Kingdom has the option of adopting the euro as its currency. However, the subject remains politically controversial, not least since the United Kingdom was forced to withdraw from its precursor, the European Exchange Rate Mechanism (see above).
The pound did not join the Second European Exchange Rate Mechanism (ERM II) after the euro was created.
Unique to Denmark and the UK is an opt-out from entry to the euro. Technically, every other EU nation must eventually sign up; however, this can be delayed indefinitely (as in the case of Sweden) by refusing to join ERM II.
On the value of British money
In 2003 the House of Commons Library published a [http://www.parliament.uk/commons/lib/research/rp2003/rp03-082.pdf research paper] (PDF document) which included an index of the value of the pound for each year between 1750 and 2002, where the value in 1974 was indexed at 100. (This was an update to an original document published in 1998.)
Regarding the period 1750–1914 the document states: "Although there was considerable year on year fluctuation in price levels prior to 1914 (reflecting the quality of the harvest, wars, etc) there was not the long-term steady increase in prices associated with the period since 1945". It goes on to say that "Since 1945 prices have risen in every year with an aggregate rise of over 27 times."
The value of the index in 1750 was 5.1, increasing to a peak of 16.3 in 1813 before declining very soon after the end of the Napoleonic Wars to around 10.0 and remaining in the range 8.5–10.0 at the end of the nineteenth century. The index was 9.8 in 1914 and peaked at 25.3 in 1920, before declining again to 15.8 in 1933 and 1934 — prices were only about three times as high as they had been 180 years earlier.
Inflation had a dramatic effect during and after the Second World War — the index was 20.2 in 1940, 33.0 in 1950, 49.1 in 1960, 73.1 in 1970, 263.7 in 1980, 4 | | |
