Comprehensive Financial History Report of Bermuda

Basic Information

• Country ISO Code: BM

• Official Language: English

• Language ISO Code: en

• Current Official Currency: Bermudian Dollar

• Currency ISO Code: BMD

Monetary Authority and Currency

Bermuda uses the Bermudian Dollar (BMD) as its official currency, which is pegged at parity to the US Dollar (USD) at a 1:1 ratio. Although Bermuda does not have a traditional central bank, the issuance of currency, regulation, and supervision of the financial system are conducted by the Bermuda Monetary Authority (BMA), established by law in 1969.

• The BMA is responsible for issuing and redeeming Bermudian notes and coins, supervising and regulating local financial institutions, managing foreign exchange controls, preventing financial crimes, and advising the government on financial and monetary matters.

• The authority does not act as a central bank in the traditional sense and does not provide lender-of-last-resort facilities.

• Interest rates are not set by the BMA but by the market, regulated by the Ministry of Finance, and generally follow the US Federal Reserve rates.

Currency and Exchange

• The Bermudian Dollar (BMD) circulates at a fixed parity with the US Dollar (USD) at a 1:1 ratio, facilitating trade and tourism, especially with the United States, Bermuda’s main economic partner.

• Despite parity, BMD and USD are distinct currencies, and credit card transactions or ATM withdrawals may incur international conversion fees.

• Only banks are legally authorized to exchange Bermudian Dollars for US Dollars, subject to a 1.25% Foreign Currency Purchase Tax.

Functions and Regulation by the Bermuda Monetary Authority (BMA)

• The BMA regulates and supervises all sectors of Bermuda’s financial market, including banks, investment firms, insurance companies, investment funds, fund administrators, digital asset businesses, credit unions, and the Bermuda Stock Exchange.

• It develops risk-based regulations to ensure financial stability and protect consumers of financial services.

• The BMA combats money laundering and financial crimes, collaborating with local and international authorities.

• It also administers foreign exchange controls and currency issuance, ensuring the integrity and confidence in Bermuda’s monetary system.

Relevant Legislation

• The BMA operates under the Bermuda Monetary Authority Act 1969, which defines its functions, powers, and responsibilities, including currency issuance, reserve management, and financial regulation.

• The Act sets limits on foreign exchange operations, currency purchases and sales, loans to financial institutions, and other monetary and financial policy activities.

Current Economic Context

• Bermuda has a highly developed economy based on international financial services, tourism, and trade.

• The government’s fiscal and economic programs have been positively rated by credit agencies, with stable outlooks for public debt and economic growth.

• The BMA contributes to financial stability by supporting sound economic policies and effective regulatory frameworks.

Summary

This report provides a detailed overview of Bermuda’s monetary system, highlighting the central role of the Bermuda Monetary Authority in currency issuance, financial sector regulation, and maintaining economic and monetary stability in the territory.