Historical Sketch

The Dutch navigator Willem Janszoon was the first European to arrive in Australia in 1606, and he named it New Holland. In 1770 James Cook took it into British possession, and the first colony of New South Wales was founded in 1788. British rule extended over the entire continent during the 19th century when five more colonies were created, Tasmania (Van Diemens Land), Western Australia, South Australia, Queensland, Victoria. In 1901, the six distinct colonies merged and attained independence as Commonwealth of Australia. Until then, the name Australia (or Australasia) was used as geographical entity for the colonies and territories.

Monetary History Overview

The early years of the Australian settlements are characterised by a scarcity of currency. In the centres, private promissory notes and bills of exchange did circulate, as well as occasional trade coins such as the Spanish Dollar. Apart from that, barter was predominant. In 1813, New South Wales introduced an emergency coinage, which was stamped from imported Spanish Dollars. The very first law passed in the colony in 1824 dealt with currency and made promissory notes denominated in Spanish Dollar admissible for legal tender. Two years later, in 1826, the law was abrogated again, and British currency became sole legal tender. The Spanish Dollar coin remained tolerated until 1855. Tasmania adopted Sterling also in 1826 and demonetized the Spanish Dollar in 1842. The other colonies adopted the Sterling currency without dedicated legislation. The monetary situation in the Australian colonies changed abruptly with the gold finds of 1851. South Australia attempted to issue gold-backed paper money through a local assay office but was not allowed to do so. In 1855, the Sydney mint opened in New South Wales and began producing British gold coins, initially for local circulation, but soon afterwards for use throughout the British Empire. Two more Australian mints opened in Melbourne (Victoria), in 1867, and in Perth (Western Australia), in 1899, to process the Australian gold. Except for gold no other coins were produced in the Australian colonies, in particular no subsidiary coins. As consequence, private copper tokens were issued in great abundance and dominated the small-scale transactions. Paper money was issued by private commercial bank but not considered legal tender. Some colonies issued state paper money, mostly only for a short time to overcome a sudden shortage, only Queensland saw an almost continuous circulation of government paper money between the 1860s and 1910. Australian independence in 1901 triggered the creation of a distinct monetary area. The 1909 Coinage Act and 1910 Notes Act created the Australian Pound as national currency. Initially, the Commonwealth Treasury was responsible for the issuance. In 1920, it was taken over by the state-owned Commonwealth Bank. Later, the Commonwealth Bank, which also had commercial activities, gave way as issuing institute to the Australian Reserve Bank of 1960, which now was constituted as pure central bank. Private paper money issuance was still legal, but the 1910 Bank Note Tax Act had rendered it commercially unlucrative so that it ceased long before it was formally abolished with the 1945 Banking Act. The Australian Pound was initially on par with the Pound Sterling and circulated alongside British money. During the economic crisis of the 1930s, the Australian Pound got devalued by 20% against Sterling, but the peg to the British currency remained in place. In 1963, Australia initiated decimalization, which took until 1966 to become reality, one year before the United Kingdom. The Australian Dollar was valued at half a Pound. The Sterling peg was abandoned in 1967 when Australia did not follow the British devaluation and re-pegged to the US Dollar. In 1974, the exchange rate got floated. Since then, the Australian Dollar has depreciated about 50% against the US currency.

Australia joined the International Monetary Fund (IMF) on 05.08.1947.

Currency Units Timeline

Currency Institutes Timeline

Monetary History Sources