Barbados Pocket Guide

Currency



Currency

In Barbados, goods such as cotton, tobacco and sugar were considered legal tender as there was not much real money on the island.

 

Barbados was not allowed to import coins from Britain and colonists weren't given permission to make their own either. This lack of coinage, caused circulation of various Spanish and Portuguese colonial coins throughout the West Indies. Due to the shortage of circulating money at the time, the colonial government purposely over-valued the current coins in circulation. This then caused the use of tobacco initially and subsequently sugar to be used as payment terms of salaries, debts and other purchases.

 

The Cutting of Coins

To aid in the increase of more change, existing coins were cut into fractions and the pieces put into circulation. Other coins were subjected to clipping, marking or being punched with a hole so as to indicate its approval in Barbados. One hundred and thirty (130) years has seen the value of Barbados' coinage remain steady.

 

However, the value of circulated gold coins was instituted in 1792 by Governor Parry at a standardized rate proportionate to the legal coin of great Britain.

 

Nonetheless, the currency continued to fluctuate in accordance with the availability of coins locally  and also to the value of precious metals on the world market.  In 1799 the situation changed with the currency reforms of 1838.

 

The Banking Concept in Barbados

By the early 19th Century the need for a proper banking system in Barbados became imminent and in 1834 the British Government  introduced the colonial Banking Regulations. Some two years later, these regulations saw the emergence of the Colonial Bank which was later renamed Barclays’ Bank DCO receive its charter.  By 1837, there were thirteen branches already established throughout the region.

 

Despite the fact that the Bank could receive any colonial tender, it could only make payments in dollars. The West Indian sugar industry lost its protectionist policy of the British Government in 1846. The industry’s collapse triggered the failure of the West India Bank which resulted in Barbados' worst ever crisis.

 

A group of ambitious West Indian merchants formed the West India bank in 1848 which challenged the exclusive control that the Colonial Bank had. The West India Bank circulated its own notes but they weren't considered legal tender at the time.

 

In 1937, a law was passed that approved the issuing of currency notes by the Government of Barbados.

 

The Government was constantly faced with the unacceptably poor state of the West  Indian currency. This led to the 1948 event of Great Britain's currency being the official currency of Barbados.

 

In 1951, the new Eastern Caribbean Currency Authority was established as a result of the Federal Experiment. This establishment saw both Barbados' official currency and the British silver and copper coins withdrawn and replaced by the new Eastern Caribbean currency.

 

By 1972 the Central Bank of Barbados was established in an effort to assume control of its monetary system.

 

Central Bank of Barbados

An Act of Parliament confirmed the establishment of the Central Bank of Barbados on May 2nd 1972. This establishment gestured the start of Barbados commanding control over its monetary policy. Barbados withdrew from the Eastern Caribbean Currency Authority on March 31st 1974 and the Headquarters of the Eastern Caribbean Currency Authority moved to St. Kitts.  On October 1st 1983, that institution later became the Eastern Caribbean Central Bank.

 

The pursuance of an independent monetary policy opened up new opportunities to promote Barbados' economy.

 

The establishment of the Central Bank of Barbados stamped out the need for external monetary regulation and management by the East Caribbean Currency Authority (ECCA) thus promoting national autonomy.

 

Other responsibilities of the Central Bank of Barbados include the regulating of financial institutions and propelling Barbados' economic development.

 

Daily exchange rates on the island can be sourced from the Central Bank of Barbados' website.

 

Last modified on Monday, 17 June 2013 14:30
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