Historical Sketch

Along the Somali coast local states have been recorded since antiquity, Islam arrived already in the 6th century. In the late 19th century, European imperialism subdued the local states, and in 1889, the region was partitioned between Great Britain and Italy. During World War II, Italian Somaliland was occupied by Great Britain, the colonial administration was restored afterwards in the form of a UN trusteeship. In 1960, the two colonies were merged and attained independence as Republic of Somalia. After a military coup in 1991, a civil war broke out during which the state institutions disappeared with local warlord having control over parts of the territory. The former British Somaliland seceded as Republic of Somaliland, a move which was not recognized internationally. The de facto state has nevertheless developed structures of its own. A re-unification of Somalia and Somaliland is not in sight.

Monetary History Overview

In the 1880s, Italy and Great Britain took possession of the Somali territories and established two colonies. At that time, the Maria Theresia Thaler had been established as unit of account. It had flown into the entire Arab and North African region via long distance trade. Indian coinage also entered via foreign trade and circulated alongside with the Thalers.

The British administration did not introduce a distinct monetary order. The British Indian currency continued to circulate. When Great Britain occupied the neighbouring Italian colony in 1941, the Italian currency was replaced by the East African Shilling. The East African currency was then also introduced into the British colony. This was formalized, however, only in 1951, when both Aden and British Somalia abandoned the Indian Rupee.

In 1960, the British and Italian colonies merged and attained independence as Republic of Somalia. On Independence Day, the Somalian Shilling became new national currency. The changeover was carried out in two steps. In June 1961, the currency from the former Italian part replaced the East African Shilling in the former British colony to create a single currency situation. In December 1962, the new national currency was issued everywhere.

In 1990, the Somalian civil war broke out which led to the overthrow of the government in early 1991. The state structures vanished and were taken over by warring regional warlords. The former British territory seceded and declared independence as Republic of Somaliland. This has not been recognized internationally. In 1994, the Bank of Somaliland began operations and introduced the Somaliland Shilling as the national currency. The market rate of the currency rapidly declined in the first years of the secession but stabilized in the late 1990s. In the mid-2010s, another phase of decline has set in. After the central bank had begun to quote an official exchange rate in April 2019, the currency stabilized and even partially recovered earlier losses.

Currency Units Timeline

Currency Institutes Timeline

Monetary History Sources