Historical Sketch

Christopher Columbus discovered the island of Trinidad for the Europeans on his third voyage in 1498. Neighbouring Tobago was sighted from afar. The Spanish claim was disputed by England, France, and the Netherlands so that the islands change rulers several times during until the 18th century. In 1763, Tobago came under British rule, Trinidad followed in 1802. The two distinct colonies were merged in 1899. After the disintegration of the West Indian Federation in 1962, Trinidad and Tobago attained independence, the republic was proclaimed in 1976.

Monetary History Overview

The Caribbean had always been an important station on the trade routes between the Spanish American possessions and Europe. Thus, Spanish trade coins got introduced and dominated the payment transactions, predominantly the so-called "Spanish Dollar", the eight Reals in silver. The isolation of the islands brought scarcity of specie and thus caused an overvaluation of the trade coins compared with the European markets. In the English possessions, various "accounting Shillings" emerged which were determined by the local valuation of the Spanish trade coins, differing considerably from the metropolitan rating of 50 Pence Sterling per Spanish Dollar. In 1825, the Pound Sterling became the sole currency for all British possessions. The dominance of Spanish trade coins in payments did not change for the time being. In the mid-19th century, however, the local accounting currencies were abolished everywhere, which corresponded to a massive devaluation of the local money. In Trinidad this was done in 1839, and as the Spanish Dollar had been traded at 125 Pence (and the Doubloon at 160 Shillings), it amounted to 60%. The island of Tobago, on the other hand, had never experience any notable deterioration of the local money. The abolition of the accounting currency in 1848 was therefore done on par. The foreign coinage was tolerated in payments until the late 19th century, and the name "Dollar" remained in customary use for an amount of 50 Pence Sterling, the former rate of the Spanish Dollar. In the late 19th century, commercial banks began issuing paper money for use in Trinidad and the other islands in the southern part of British West Indies, using denominations of the Dollar at 50 Pence Sterling. The issuance remained unregulated for long time until in 1905, the government established the Board of Commissioners of Currency for Trinidad and Tobago as an oversight body and began issuing state paper money. This gave the 1st Trinidad and Tobago Dollar a legal status alongside the Pound Sterling. After the Second World War, Great Britain decided to merge the three monetary areas in the West Indies, overseen by the currency boards of Guyana, Trinidad and Tobago and Barbados, which all three were using the Dollar at 50 Pence Sterling as unit of account. The currency commission of the British Caribbean Territories began operations in August 1951 and issued the British West Indies Dollar as common currency. After independence in 1962, the Trinidad and Tobago government decided to leave the common currency area whose members were at that time mostly still under colonial rule. Two years later, in December 1964, the central bank began operations, and the 2nd Trinidad and Tobago Dollar became the national currency. It remained pegged to the Pound Sterling and followed the 1967 devaluation and the floating of 1972. Since the United States had meanwhile become the main economic partner, the Dollar was re-pegged to the US currency in May 1976 when the British currency began depreciating. It got devalued three times, totalling almost 60%, until 1993 when the exchange rate was floated. Since the late 1990s, Dollar has remained mostly stable against the US currency.

Trinidad and Tobago joined the International Monetary Fund (IMF) on 16.09.1963.

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