Comprehensive Financial History Report of Belize

Basic Information

• Country ISO Code: BZ

• Official Language: English

• Language ISO Code: en

• Current Official Currency: Belize Dollar

• Currency ISO Code: BZD

Monetary History of Belize

The Belize dollar (BZD) has been the official currency since 1973, replacing the British Honduras pound at par. The currency is decimalized into 100 cents.

• Since May 1976, the Belize dollar has been pegged to the US dollar at a fixed exchange rate of 2 BZD = 1 USD.

• This fixed rate is a cornerstone of Belize’s macroeconomic stability, anchoring inflation expectations and providing a stable environment for investment.

• To maintain the peg, the Central Bank of Belize holds foreign assets equivalent to at least 40% of its domestic liabilities and manages credit growth to avoid excessive pressure on international reserves.

Monetary Policy

• The Central Bank of Belize formulates and implements monetary policy aimed primarily at maintaining monetary stability, especially exchange rate stability, and fostering credit and exchange conditions conducive to economic growth.

• Monetary policy employs both direct and indirect instruments to control liquidity and credit in the financial system.

• Direct instruments include credit and interest rate controls, used sparingly.

• Indirect instruments such as reserve requirements and open market operations are used to adjust liquidity conditions and signal policy stance.

• The transmission mechanism primarily operates through the credit channel, influencing economic growth and demand for foreign reserves.

Coins and Banknotes

• Coins in circulation include 1, 5, 10, 25, 50 cents, and 1 dollar.

• Banknotes include denominations of 2, 5, 10, 20, 50, and 100 dollars.

• Banknotes feature images of national heroes, historical landmarks, and cultural symbols.

Economic Context

• Belize is a small open economy with key sectors including agriculture, tourism, and services.

• The Central Bank carefully monitors banking liquidity to prevent excesses that could pressure the exchange rate and international reserves.

• Between 1990 and 2010, monetary policy reforms positively impacted GDP growth, credit expansion, reserves, and financial system liquidity.

• In 2009, the Monetary Policy Committee was established to implement a more market-oriented approach, liberalizing Treasury bill rates and adjusting banks’ liquid asset requirements.

Summary Table

This report provides a detailed overview of Belize’s monetary history, highlighting the Belize dollar as the official currency pegged to the US dollar, the monetary policy framework implemented by the Central Bank, and its impact on the country’s economic and financial stability.