Historical Sketch

The Spanish navigator Alonso de Salazar discovered the islands for the Europeans in the 1520s and called them “Islas de los Reyes”, after the Spanish monarchs. In 1788 they were “re-discovered” by the English John Marshall. The Spanish claim was never followed by colonization activities. In 1885, Germany acquired the island and initially mandated their administration to a colonial society, the Jaluit Gesellschaft. In 1906, the government took over and added the Marshall Islands to their possession of New Guinea. In 1885, they were sold to Germany, which initially left them to a colonial society, then in 1906 subordinated them to the 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 Marshall Islands attained independence The UN 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 February 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 Marshall Islands joined the International Monetary Fund (IMF) on 21.05.1992.

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Monetary History Sources