Historical Sketch

In 1887, France established a joined administration for the territories of Cambodia, Laos and Vietnam (Annam, Cochin China and Tonkin). During World War II, it was administered by the Vichy government and under Japanese occupation. In early 1945, Japan overthrew the French colonial rule and attempted to establish semi-autonomous governments under own suzerainty. After the Japanese defeat the French rule was nominally restored, but the north of Vietnam could never been brought under control and finally defeated the colonial power. France had attempted to create the Indochinese Federation with a large autonomy for the constituent states. After the defeat of 1954, France withdrew, and Cambodia, Laos and the two Vietnamese states attained independence.

Monetary History Overview

Traditionally, the economy of the Viet States has been based on silver. In transactions bullion was used in units of the Tael (Vietnamese: "Lạng"). For small transactions, copper and zinc coins in the style of the Chinese Cash (Vietnamese: "Văn" and "Phân", French: "Sapèque") were used. They did not have a fixed value against the silver standard. Coin strings of 600 zinc Cash could replace silver bullion in larger transactions. In the 19th century, the silver Spanish Dollar entered the economy through foreign trade, mainly in the form of Mexican coins, and established itself as a unit of account. In the 1830s, Vietnamese silver bars were produced in coin-like shape, but since their fineness remained uncertain and was usually lower than the one of the Dollar, they could not displace the foreign coinage.

In 1862, the French military governor for Cochinchina adopted the Mexican Dollar ("Piastre") as legal tender and unit of account. This monetary arrangement was extended to Cambodia and further possessions in the region. In January 1875, the Bank of Indochina was founded as French colonial bank and began operations in Saigon a couple of months later. Paper money was issued from the following year onwards using denominations "Dollar" and "Piastre" interchangeably. In December 1878, the colonial authorities authorized the issuance of subsidiary coins to decouple from the uncertain availability of foreign coins. Thus, the Indochinese Piastre was gradually established as currency based on circulating silver. In 1895, the weight of the silver Piastre was slightly reduced in 1895 to match with metric units, and end 1904 the foreign silver Dollars were demonetized. The silver standard remained unaltered, except for a short period in the early 1920s when the convertibility of paper had to be suspended after a surge of the silver price. France had introduced a gold peg for the Franc in 1928 to stabilize the currency. In May 1930, the Indochinese silver standard was abolished, and the Piastre pegged to the French Franc and thus became a gold currency. Both currencies unpegged from gold in October 1936. During the German occupation of France in World War II, Indochina remained under the control of the Vichy government. Initially, it was therefore not occupied by Japan. This happened only during 1944, after the liberation of France by the Allied forces. Japan did not introduce its military currency, but Piastre got nominally pegged to the Japanese Yen. France re-established the colonial administration after the Japanese defeat in August 1945, except for the strongholds of the communist rebels in the north. The Indochinese Piastre re-pegged to the French Franc, and an exchange of banknotes was carried out. The highest denominated notes, which were issued only during the Japanese rule, were declared invalid without compensation. France began to reorganize its south-east Asian possessions in the 1950s. As a consequence, the Bank of Indochina lost its status as colonial bank, and in January 1952, the Currency Institute for Cambodia, Laos and Vietnam took over money issuance. Three years later, after the French defeat, Vietnam got divided and all four states attained independence.

Currency Units Timeline

Currency Institutes Timeline

Monetary History Sources