Comprehensive Financial History Report of The Bahamas

Basic Information

• Country ISO Code: BS

• Official Language: English

• Language ISO Code: en

• Current Official Currency: Bahamian Dollar

• Currency ISO Code: BSD

Monetary History of The Bahamas

The Bahamian dollar (sign: $ or B$) has been the official currency of The Bahamas since 1966, replacing the Bahamian pound at a rate of 1 dollar = 7 shillings (approximately US$0.98). This change occurred seven years before the country’s independence in 1973. The introduction of the dollar established parity with the US dollar, which remains fixed at a one-to-one rate.

Relationship with the US Dollar

• The Bahamian dollar is pegged to the US dollar at a fixed rate of 1 BSD = 1 USD.

• The Central Bank of The Bahamas uses reserve requirements, changes in the bank discount rate, selective credit controls, and moral suasion to maintain this parity and ensure monetary stability.

• Although foreign currencies are subject to exchange controls, the parity means businesses accept both Bahamian and US dollars interchangeably. Many tourist-oriented businesses keep extra US dollars for convenience.

Digital Currency

• On October 20, 2020, The Bahamas became the first country to introduce a legal digital currency, the Sand Dollar, which serves as a digital alternative to the traditional Bahamian dollar.

Coins

• Introduced in 1966 in denominations of 1, 5, 10, 15, 25, 50 cents, and 1 and 2 dollars.

• Early coins featured nickel-brass (1 cent), cupronickel (5, 10, 15 cents), nickel (25 cents), and silver (50 cents and 1 dollar).

• The 10-cent coin was scalloped, and the 15-cent coin was square-shaped. Silver coins ceased circulation after 1966.

• Over time, metals changed: bronze replaced nickel-brass in 1970, brass in 1974, and copper-plated zinc in 1985 for the 1 cent coin.

• In 1989, cupro-nickel 50 cent and 1 dollar coins were introduced but did not replace banknotes.

• Coins bear the Bahamian Coat of Arms and cultural symbols such as starfish (1 cent), pineapple (5 cents), bonefish (10 cents), hibiscus (15 cents), and native sloops (25 cents).

• The 1 cent coin was last minted in January 2020 and demonetized at the end of 2020. Cash transactions are now rounded to the nearest 5 cents.

Banknotes

• Denominations include $1, $3, $5, $10, $20, $50, and $100.

• The $3 bill was created to ease decimalization, as three dollars roughly equaled one pound.

• Banknotes feature portraits of Queen Elizabeth II and national symbols.

• The Central Bank of The Bahamas issues the banknotes and maintains their security features.

Economic and Monetary Context

• The Bahamas’ economy is heavily reliant on tourism and financial services.

• Maintaining parity with the US dollar facilitates trade and investment, given the close economic ties with the United States.

• The Central Bank’s monetary policy aims to preserve currency stability while supporting economic growth.

Summary Table

This report provides a detailed overview of The Bahamas’ monetary history, highlighting the Bahamian dollar as the official currency pegged to the US dollar, the introduction of the Sand Dollar digital currency, and the cultural and economic significance of its coins and banknotes.

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