Historical Sketch

Portuguese navigators discovered the island for the Europeans in the early 16th century and named it "Ilha dos Barbudos (Island of the Bearded)". The first European settlers were English in the 17th century, and Barbados was made a crown colony in 1663. In 1966, Barbados attained independence and is a republic since 2021.

Monetary History Overview

The Caribbean had always been an important station on the trade routes between the Spanish American possessions and Europe. Thus, Spanish trade coins got introduced and dominated the payment transactions, predominantly the so-called "Spanish Dollar", the eight Reals in silver. Unlike other islands, in Barbados gold coins like the "Spanish Doubloon" of 8 Escudos were more prominent than silver. The isolation of the islands brought scarcity of specie and thus caused an overvaluation of the trade coins compared with the European markets. In the English possessions, various "accounting Shillings" emerged which were determined by the local valuation of the Spanish trade coins, differing considerably from the metropolitan rating of 50 Pence Sterling per Spanish Dollar. In 1825, the Pound Sterling became the sole currency for all British possessions. The dominance of Spanish trade coins in payments did not change for the time being. In the mid-19th century, however, the local accounting currencies were abolished everywhere, which corresponded to a massive devaluation of the local money. In Barbados this was done in 1848, and as the Spanish Dollar had been traded at 78 Pence (and the Doubloon at 100 Shillings), it amounted to almost 36%. The foreign coinage was tolerated in payments until the late 19th century, and the name "Dollar" remained in customary use for an amount of 50 Pence Sterling, the former rate of the Spanish Dollar.

In 1837, the Colonial Bank in Trinidad was the first commercial bank of British West Indies. In the late 19th century, it began issuing paper money, soon followed by Canadian banks. In Barbados, paper money issuance began in 1882, with notes denominated in the customary Dollar of 50 Pence Sterling, although the official accounting remained Sterling. The 1911 Bank Note Act regulated private issuance, and in April 1938, the Barbados Currency Board opened as both oversight body and issuer of government paper money. Again, the denominations were in 1st Barbadian Dollar, making it the de facto currency beside the Pound Sterling. After the Second World War, Great Britain decided to merge the three monetary areas in the West Indies, under oversight of the currency boards of Guyana, Trinidad and Tobago and Barbados. They all used the Dollar of 50 Pence Sterling as denomination of their local notes. At the 1946 West India Monetary Conference, finally, the unification of the three monetary areas was decided. The currency commission of the British Caribbean Territories began operations in August 1951 and issued the British West Indies Dollar as common currency, later called Eastern Caribbean Dollar. Barbadian independence in 1966 triggered a movement for the creation of a distinct monetary regime, independent of the other Caribbean islands. In May 1972, the Central Bank of Barbados opened for business, but the negotiations with the Eastern Caribbean Monetary Union on the withdrawal continued until November 1973. A month later, the issuance of the 2nd Barbadian Dollar began, and Barbados left the monetary union in following April. The Sterling peg was carried over from the Eastern Caribbean currency without change and continued until 1975. Since the British currency continually declined against the US Dollar, the Barbadian economical interests triggered a re-peg. The 1975 parity has remained unchanged since then.

Barbados joined the International Monetary Fund (IMF) on 29.12.1970.

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