Historical Sketch

In the early 16th century, several Portuguese navigators discovered the uninhabited islands of Mauritius and Réunion for the Europeans, among them Pedro de Mascarenhas in 1512, whose visit gave rise to the name Mascarenes. Since the Portuguese did not take interest in a colonization, the French seized first Réunion in 1649, calling it Isle de Bourbon after the ruling dynasty. After the French revolution the name was changed to Isle de la Réunion (after the “Réunion des patriotes” on 10 August 1792), intermittently also Isle Bonaparte. In 1715, the French also seized Mauritius which just had been abandoned by the Dutch after some 50 years of unsuccessful settlement, from which only today’s name has remained but which the French changed into Isle de France. During the Napoleonic Wars, Great Britain seized both Mascarene Islands in 1810. Réunion was returned to France in 1815 while Mauritius remained British for more than 150 years. In 1946, Réunion’s colonial status was abandoned for an integration into France as an overseas department, since 1982 also a French region.

Monetary History Overview

During French rule, no distinct monetary order was introduced in the Mascarenes, not was any French coinage imported in a larger scale. Like in other remote colonies the standard French accounting deteriorated over time and a local standard emerged. Around the 1720s, the circulating foreign coinage was rated in a local 1st Mascarenes Livre rather than in the French standard. Payment transactions were made in Spanish Dollars or other trade coins. Occasionally, gold and silver coins from South India came to the islands from the French colonies there. Overall, coinage was scarce, and the island government intermittently issued paper money to overcome the lack of specie, which usually was withdrawn shortly afterwards. All this led to a continued devaluation of money, which turned into a paper money inflation in the late 1790s. In 1810, governor DeCaen ordered the withdrawal of the depreciated paper money and decreed a coinage law for the 2nd Mascarenes Livre as new coin unit in a bi-metallic standard. The reform could never be implemented as in the same year 1810 the Mascarenes were conquered by Britain. A single silver coin could be produced under wartime conditions, popularly referred to as "DeCaen Piastre". In 1815, the Mascarenes were split up, Réunion returned to French rule, while Great Britain kept Mauritius.

The reinstalled French administration of Réunion did not change the monetary situation immediately. In 1826, the French Franc was declared sole legal tender for payments to state instances, the accounting switched in 1839, and foreign coins got demonetized in 1879. In 1874, Bank of Réunion obtained the privilege to issue paper money, which had been founded twenty years earlier as colonial bank to subsidize settlers after the abolition of slavery. The 1st Réunion Franc was identical to the metropolitan one, convertibility was, however, restricted. In 1879, the local government had to issue state cash notes to overcome the money shortage. In 1897, metallic emergency tokens were issued for the same purpose. After mainland France had been occupied by Germany in 1940, the African possessions remained under control of the exiled government in Brazzaville (Congo). It decided to change the colonial monetary order. In 1944, the Central Bank of Overseas France (originally "of Free France") began operations and took over the issuing privilege from the Bank of Réunion. This remained so after the French liberation. After the Second World War, France reorganised the monetary system of its colonies. In December 1945, colonial currencies were created for West Africa, Equatorial Africa and Indian Ocean territories (Madagascar, Comoros, Réunion). It was applied to Réunion, as well, although its status changed from colony into an overseas department in March 1946, the 2nd Réunion (CFA) Franc was identical to the colonial CFA Francs in the rest of French Africa. In December 1958, metropolitan France carried out a currency reform. While other overseas departments implemented the switchover in 1963, Réunion's monetary situation remained unchanged. However, some of the paper money issued for Réunion still got overprinted with the new denominations. In 1974 finally, France decided to abolish the different currencies for its overseas departments, thereby also bringing the French monetary system to Réunion. On New Year 1975, the Bank of France took over the issuance privilege and introduced metropolitan money everywhere. The local currency was withdrawn within three months.

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