Historical Sketch

The Spanish navigators Diego da Rocha and Alvaro de Saavedra discovered the islands for the Europeans in the 1520s and called them “Islas Carolinas”, after the Spanish king. The Spanish claim was never followed by colonization activities. In 1899, Germany acquired the islands and added them to their possession of New Guinea. During World War I, Japan occupied the islands and obtained a League of Nations mandate in 1920. Some islands were battleground during World War II and were subsequently conquered by the United States. From 1947 onward, the administration was in the form of a United Nations Trust Territory. In 1979, the four island groups of Yap, Chuuk, Pohnpei, Kosrae of the Caroline Islands attained independence as Federated States of Micronesia. The fifth island group of Palau did not join but attained separate independence in 1981. The United Nations Trust Territory was formally terminated by Security Council Resolution No. 683 in 1990.

Monetary History Overview

Monetary economy was introduced to the different islands by foreign traders. The Spanish Dollar had flown in from the Philippines and was used in payments. The various colonial powers introduced their accounting systems but did not enact any local currency legislation. The US military administration introduced the United States Dollar in September 1944. Holdings in Japanese currency were confiscated except for a small cash amount. The assets were finally redeemed and converted in 1957. The US Dollar has remained sole legal tender after independence in 1979.

The Federated States of Micronesia joined the International Monetary Fund (IMF) on 24.06.1993.

Currency Units Timeline

Currency Institutes Timeline

Monetary History Sources