Historical Sketch

In 1840, Zanzibar seceded from the Omani mainland, and in the following, the sultanate also brought the adjacent East African coast under control. Following the 1884 Berlin conference, Germany tried to acquire African lands that had not been claimed by other European imperial powers. The German East African Company, established for this purpose, laid claim on coastal territories held by Zanzibar and established the German East Africa colony. In 1891, the Company ceded the administration to the German government and focused on economic activities. During World War I, Great Britain and Belgium invaded the German colony but without ousting the German administration. In 1922, the territory was placed under a League of Nations mandate, later UN trusteeship. Great Britain took over Tanganyika while Belgium got hold of Ruanda-Urundi. In 1961, Tanganyika attained independence and became a republic the following year. The island of Zanzibar attained independence two years later, in December 1963. As the sultanate was overthrown within a month, the resulting interim government wanted a merger with the mainland. In April 1964, Tanganyika and Zanzibar joined to form the state of Tanzania.

Monetary History Overview

In 1890, the German East African Company obtained the permission to issue silver and copper coins and to establish a bank with issuing privilege for paper money. While the Company's bank was never created, the coins were indeed produced. The denomination of German East African Rupee corresponded to the Indian Rupee, which had entered the region through overseas trade. In the same way, the Maria Theresa Thaler had entered the markets but got demonetized by the colonial administration in 1893. The Indian coins remained current. In 1903, the German East Africa Company renounced to the minting rights, to be taken back by the government. In the following year, the German East African currency got reformed and switched to the gold standard. The anchor currency was no longer the Indian Rupee, although it also had adopred the gold standard in 1899, but the German Reichsmark. The third effect of the currency reform concerned the decimalization of the sub-unit. In 1905, the German East African Bank opened for business and began issuing paper money. In the mid-1910s, the banknotes had mostly disappeared so that the emergency "interim notes" had to be produced in 1915, and again 1917, when the military situation had deteriorated so far that the these issues were referred to as "bush notes". The British and Belgian occupiers did not recognize the wartime note so that they became worthless, although, theoretically, they could be redeemed at the Bank's headquarters in Germany. The Belgian military command introduced Congolese currency in their territory, the British the East African Currency. Tanganyika nominally became part or the East African Common Currency Area in 1922.

Tanzania kept the common East African currency with neighbouring Kenya and Uganda for five years after independence. In 1966, the Tanzanian Shilling was introduced as national currency. It repegged from the Pound Sterling to the US Dollar and remained at par with the Kenyan and Ugandan currencies of until end 1979. The peg of the three currencies had switched to IMF Special Drawing Rights (SDR) unit in 1975, after the split the exchange rate got floated. In the mid-1980, the Shilling began depreciating which even accelerated during the 1990s. Around 1995, after close to 99% of the Shilling's value had been lost, the currency saw a short stability period, but already in the early 2000s, the Shilling began a slower but steady depreciation again.

Tanzania joined the International Monetary Fund (IMF) on 10.09.1962.

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