Comprehensive Financial History Report of the Cayman Islands

Basic Information

• Country ISO Code: KY

• Official Language: English

• Language ISO Code: en

• Current Official Currency: Cayman Islands Dollar

• Currency ISO Code: KYD

Monetary History of the Cayman Islands

• The Cayman Islands introduced their own currency, the Cayman Islands dollar (KYD), in 1972, replacing the Jamaican dollar at par.

• Jamaican currency and Cayman Islands dollars both remained legal tender until August 31, 1972, when Jamaican currency ceased to be legal tender.

• The Cayman Islands dollar has been pegged to the United States dollar since April 1, 1974, at a fixed rate of 1 KYD = 1.2 USD.

• The Currency Law of 1974 established the peg, which was later updated and replaced by the Monetary Authority Law, with the Governor determining the KYD’s value against the USD.

• In 2023, the Cayman Islands Monetary Authority sought public input for new coin and banknote designs featuring King Charles III, to be gradually introduced into circulation.

Coins

• Coins were first introduced in 1972 in denominations of 1¢, 5¢, 10¢, and 25¢.

• Initially, the 1¢ coin was bronze, and the others were cupronickel. From 1992, copper-plated steel and nickel-plated steel replaced the earlier metals.

• Coin designs feature local fauna and maritime heritage:

  • 1 cent: Grand Cayman thrush

  • 5 cents: Cayman crawfish

  • 10 cents: Green sea turtle

  • 25 cents: Schooner "Kirk B"

Banknotes

• The initial banknotes issued in 1971 included denominations of $1, $5, $10, and $25.

• Later, denominations of $40 (1981), $50 (1985), $100, and others were introduced to meet economic needs.

• Banknotes incorporate security features and unique designs reflecting the culture and heritage of the Cayman Islands.

• The Cayman Islands Monetary Authority (CIMA) is responsible for issuing and redeeming currency.

Economic and Monetary Context

• The adoption of a distinct currency in 1972 was driven by the desire for economic and political independence from Jamaica.

• The fixed peg to the US dollar provides monetary stability and facilitates trade and investment, especially given the Cayman Islands’ role as a global financial center and tourist destination.

• The Cayman Islands is known as a tax haven, with no corporate income tax, capital gains tax, or other direct taxes, attracting international businesses and investors.

• Revenue is generated through work permit fees, import duties (ranging from 22% to 42% on some goods), tourism fees, and financial transaction fees.

Summary Table

This report provides a detailed overview of the Cayman Islands’ monetary history, emphasizing the introduction of the Cayman Islands dollar, its peg to the US dollar, the coin and banknote designs, and the territory’s unique economic and tax environment.

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