Historical Sketch

Since the early Middle Ages, the history of Malta had been tied to the one of neighboring Sicily. After the Norman conquest in the 12th century, it became nominally a part of the Kingdom of Sicily. In 1530, Emperor Charles V gave Malta to the Order of St. John (Knights Hospitaller) to compensate for their recent loss of the island of Rhodes against the Ottoman Turks. The Knights’ rule remained for two and a half centuries until Napoleonic France conquered the island in1798. This was immediately counteracted by Britain who drove out the French already in 1800. In 1814, Malta was made a British possession for the next 150 years. Independence was attained in 1964 and ten years later, the Republic of Malta was proclaimed.

Monetary History Overview

The Maltese coinage system under the Knights' rule dated back to the time of their taking possession in 16th century. Around 1755, a coinage reform had been carried out that put back the Maltese Scudo (Thaler) to silver standard related to the one of neighbouring Sicily. The circulating medium mostly consisted of Sicilian and Spanish coins since the local minting had always been scarce and got fully abandoned in the second half of the 18th century. The arrival of the British rule triggered the introduction of Sterling accounting in 1825. British gold and subsidiary coins were imported but could not displace the Spanish and Sicilian silver coins. The British administration took this even into account by creating a third farthing copper coin that fitted into the Scudo system. An attempt at demonetization in 1855 could not be implemented so that the old Sicilian coinage remained in circulation even after the Kingdom of Two Sicilies had disappeared in 1860. Only after Italy had issued a final call for their redemption until end 1885, the Maltese government made an effort to recall them. A year later, also the Spanish Dollar was demonetized, such that after 1886, only British currency was circulating. Paper money issuance by two commercial banks had already started in the 1810s. In 1882, the Anglo-Egyptian Bank took over the financial administration of Malta and became the third commercial bank to issue paper money. Private money issuance ceased in the late 19th century. During a money shortage before the First World War, the colonial treasury got authorized to issue local paper money. It was withdrawn a year later, when supply from Great Britain had been secured. In 1940, the issuance of state paper money was resumed once more to prevent a wartime shortage. These notes were not recalled after the war but triggered the creation of a distinct Maltese currency. In July 1949, the Malta Currency Board began operations, and the Maltese Pound became the national currency unit at par with the Pound Sterling. The British paper money was withdrawn until September 1949, not so the subsidiary coins, which Malta did not issue on its own before decimalization in 1972. The currency situation did not change after the Maltese indepndence of 1964. The Maltese Pound followed the 1967 devaluation of the Sterling, and parity was kept until 1971 when a slight upvaluation was done. Malta floated its currency together with Great Britain, but also severed the link to the Sterling. In May 1972, the Pound got decimalized, and in 1983, it was renamed into Maltese Lira, and the English denominations disappeared from the banknotes and coins. The value of the Maltese currency had remained stable against the US Dollar throughout the years, and in the 2000s, when the adherence to the European Monetary Union became tangible, it even appreciated. In 2008, Malta joined the European Monetary Union and introduced the European Euro. The Maltese banknotes and coins were withdrawn in within one month.

Malta joined the International Monetary Fund (IMF) on 11.09.1968.

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