Historical Sketch

In 1568, the Spanish navigator Álvaro de Mendaña discovered the islands for the Europeans. The Spanish claim was not followed by colonization attempts. In the late 19th century, the rivalling colonial aspirations of Germany and Great Britain led to the partition of the archipelago. The northern part was administered out of German New Guinea and ceded to Great Britain in 1900, except for the largest island of Bougainville. The southern part was declared a British protectorate in 1893. During World War II, Japan occupied New Guinea and the Solomons. The Allied reconquest until 1945 caused large devastations. When in 1975, Papua New Guinea attained independence, Bougainville tried to secede as Republic of North Solomons, without success but finally reaching an autonomy status. A unification with the southern part of the archipelago was not aspired when British rule ended in 1978 and the Solomon Islands attained independence.

Monetary History Overview

In pre-colonial times the monetary economy was not widespread in the Solomon Islands. Barter dominated, in which various natural products such as shells or feathers had a money-like character. British coinage was made legal tender in the Solomon Islands in 1910, but Australian currency was in wider use. In September 1916, a currency notes regulation was passed to create government paper money for use in the colony. A distinct currency commission does not seem to have been created. The Solomon Islands Pound was identical to the Pound Sterling, its use outside the colony was, however, limited. In 1931, Australia devalued its currency against the Sterling, and the 1937 currency regulation fully adopted the Australian currency for the Solomon Islands. The local paper money disappeared. In 1942, Japan conquered the Solomon Islands. The military administration introduced the Japanese Military Yen in July 1942, like it was the case for all the conquered territories, the denomination of the occupation notes being "Shilling". The Australian Shilling was exchanged at par, which corresponded to a devaluation by more than 27%. After the Japanese defeat in September 1945, the pre-war currency was restored. The occupation notes were declared invalid without compensation. The Australian Pound continued to be used instead of a distinct currency, and in 1966, the Australian decimalization extended to the British Solomon Islands, as well. In June 1976, the Solomon Islands Monetary Authority began operations. It was transformed into a central bank in early 1983. A year before independence, the Solomon Islands Dollar was introduced as the national currency, and the Australian money got demonetized until October 1978. Initially on par with the Australian Dollar, the exchange rate was floated in October 1979. Currency stability was of short duration, already in 1981, the Dollar began to depreciate. A decade later, after 70% of the value had gone, the currency began to stabilize. Again, only for short time, the political crisis at the turn of the millennium, costed another 50% of the value. Since the mid-2000s, the Dollar has remained more or less stable.

Albania joined the International Monetary Fund (IMF) on 15.11.1991.

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