Historical Sketch

The Dutch navigator Abel Tasman was the first to discover the Fiji Islands for the Europeans in 1643, and as the knowledge had faded, James Cook "re-discovered" them again in 1774. Subsequently, European influence rose in the early 19th century but for the moment without colonial aspiration. The Fijian islands had originally various local rulers which were united into a confederacy in 1865 which became the Kingdom of Fiji in 1871 under king Cakobau, the ruler of the Bau island state. The new regime collapsed already a year later, and Cakobau ceded Fiji to Great Britain. Colonial rule was established in 1874 and lasted until independence in 1970.

Monetary History Overview

Monetary economy had been introduced to Fiji in the mid-19th century by foreign traders and settlers. The Fijian kingdom passed a currency law in 1872 introducing the 1st Fijian Dollar as national currency. It was at par with the US Dollar, and foreign banknotes and coins were accepted as legal tender. The government issued paper money backed by foreign coins and government bond, and a commercial bank was entrusted with the central bank role in 1873. The national currency failed briefly afterwards as the Fijian state went de facto bankrupt in 1873. The government's paper money became worthless and disappeared. After the establishment of the British colony, Fiji was subordinated to the currency legislation of New South Wales (without local proclamation), and all foreign currency in circulation was demonetized until end 1875.

In 1914, the colonial administration set up a currency commission which created the Fijian Pound as a separate currency. It was at par with the Pound Sterling but got devalued by 10% in 1933. The Fijian Pound fully followed the Sterling devaluation of 1949, but only partly the one of 1967. Following the examples of Australia and New Zealand, Fiji decimalized the currency in 1969 by creating 2nd Fijian Dollar at half a Pound. In 1970, Fiji attained independence. The currency commission was succeeded by a monetary authority in 1973, which in turn got followed by the Reserve Bank of Fiji in January 1984. Otherwise, the monetary policy remained unchanged. The Sterling peg of the Dollar was kept also after Britain had floated its currency in 1972. However, Fiji tried to compensate the depreciation against the US Dollar and upvalued several times against the Sterling, until finally, the link was severed in February 1974. After the floating of the exchange rate, the currency remained stable for a decade but began to decline in the political crisis of the mid-1980s during which it lost some 40% of its value. After another decade of relative currency stability, the Dollar was devalued by around 30% in the late 1990s and has remained more or less stable since then.

Fiji joined the International Monetary Fund (IMF) on 28.05.1971.

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