The dollar (ISO 4217 code: BMD) is the currency of Bermuda. It is normally abbreviated with the dollar sign $ or, alternatively, BD$ to distinguish it from other dollar-denominated currencies. It is subdivided into 100 cents. The Bermudian dollar is not normally traded outside of Bermuda.
For nearly four hundred years Spanish dollars, known as pieces of eight were in widespread use on the world's trading routes, including the Caribbean Sea region. However, following the revolutionary wars in Latin America, the source of these silver trade coins dried up. The last Spanish dollar was minted at the Potosi mint in 1825. The United Kingdom had adopted a very successful gold standard in 1821, and so the year 1825 was an opportune time to introduce the British sterling coinage into all the British colonies. An imperial order-in-council was passed in that year for the purposes of facilitating this aim by making sterling coinage legal tender in the colonies at the specified rating of $1 = 4s 4d (One Spanish dollar to four shillings and four pence sterling). As the sterling silver coins were attached to a gold standard, this exchange rate did not realistically represent the value of the silver in the Spanish dollars as compared to the value of the gold in the British gold sovereign, and as such, the order-in-council had the reverse effect in many colonies. It had the effect of actually driving sterling coinage out, rather than encouraging its circulation.
Remedial legislation had to be introduced in 1838 so as to change over to the more realistic rating of $1 = 4s 2d. However, in Jamaica, British Honduras, Bermuda, and later in the Bahamas also, the official rating was set aside in favour of what was known as the 'Maccaroni' tradition in which a British shilling, referred to as a 'Maccaroni', was treated as one quarter of a dollar. The common link between these four territories was the Bank of Nova Scotia which brought in the 'Maccaroni' tradition, resulting in the successful introduction of both sterling coinage and sterling accounts. It wasn't however until 1st January 1842 that the authorities in Bermuda formally decided to make sterling the official currency of the colony to circulate concurrently with Doubloons (64 shillings) at the rate of $1 = 4s 2d. Contrary to expectations, and unlike in the Bahamas where US dollars circulated concurrently with sterling, the Bermudas did not allow themselves to be drawn into the U. S. currency area. The Spanish dollars fell away in the 1850's but returned again in the 1870's following the international silver crisis of 1873. In 1874, the Bermuda merchants agreed unanimously to decline to accept the heavy imports of U.S. currency except at a heavy discount, and it was then exported again. And in 1876, legislation was passed to demonetize the silver dollars for fear of them returning. In 1882, the local 'legal tender act' demonetized the gold doubloon, which had in effect been the real standard in Bermuda, and this left pounds, shillings, and pence as the sole legal tender. The British pound sterling then remained the official currency of Bermuda until 1970 when it was finally decided to take the action that British Honduras had already done 85 years earlier. In line with the international trend towards decimalization, Bermuda introduced a new currency in the form of a dollar that was fixed at an equal value to the US dollar which at that time was equal to 8 shillings 4 pence sterling. The new Bermuda dollars operated in conjunction with decimal fractional coinage, hence ending the pounds, shillings, and pence system in that colony in the year before it was ended in the United Kingdom itself. The decision to finally align with the US dollar was at least in part influenced by the devaluation of sterling in 1967 and Bermuda's increasing tendency to keep its reserves in US dollars. Although Bermuda changed to a U. S. based currency and changed the bulk of its reserves from sterling to U. S. dollars in 1970, it still nevertheless remained a member of the sterling area since at that time, the pound sterling and the US dollar had a fixed exchange rate of £1 = $2.40. Following the US dollar crisis of 1971 which ended the international Bretton Woods agreement of 1944, the US dollar devalued, but the Bermuda dollar maintained its link to sterling, hence breaking its parity with the US dollar.
On the 22nd June 1972, the United Kingdom unilaterally ended its sterling area based exchange control laws, hence excluding Bermuda from its sterling area membership privileges. Bermuda responded on 30th June 1972 by amending its own exchange control laws accordingly, such as to impose exchange control restrictions in relation to Bermuda only. At the same time, Bermuda realigned its dollar back to one-to-one with the US dollar and formally pegged it at that rate. As far as UK law was concerned, Bermuda still remained a member of the overseas sterling area until exchange controls were abolished altogether in 1979. For a history of currency in the British West Indies in general, see British West Indies dollar.
In 1970, coins were introduced in denominations of 1, 5, 10, 25 and 50 cents. The 1 cent was bronze, with the other coins struck in cupro-nickel. In 1983, nickel-brass 1 and 5 dollars coins were issued, although the 5 dollars coin was not issued again. The original Bermuda dollar coin was modelled on the pound coin. These coins were unpopular, due to their size and weight, and-with the one dollar note not being removed from circulation-many Bermudians refused to use them. The original one dollar coin was replaced in 1988 by a new coin, similar to the Canadian dollar coin. This was larger, but thinner. Having learnt from its experience with the first coin, the Bermudian government first fixed a date when the one dollar note would cease to be legal tender, obliging adoption of the new coin, the original one and five dollar coins ceasing to be legal tender. Also in 1988, copper-plated steel replaced bronze, and production of the 50 cents coins ceased. In 1991, copper-plated zinc replaced copper-plated steel in the 1 cent. Coins in circulation are:
- 1 cent
- 5 cents
- 10 cents
- 25 cents
- 1 dollar
Prior to changing to the dollar, the Government of Bermuda had not issued its own coins, other than commemorative ones (the Bermuda Crowns), since the 19th Century, at the latest. In the 20th centuries, its pound notes were issued in all denominations (and the only coins used were UK ones). In 1970, the government introduced dollar notes in denominations of 1, 5, 10, 20 and 50 dollars. From 1974, the Bermuda Monetary Authority took over paper money production, introducing 100 dollar notes in 1982 and 2 dollars in 1988, when the 1 dollar was replaced by a coin. 1970 dollar notes are all printed with Bermuda Government across the top. Later notes substitute Bermuda Monetary Authority. In 2008, it was announced that banknotes would be redesigned in celebration of Bermuda's 400th anniversary, the first redesign since the launch of the dollar.The new designs were described as "distinctly Bermudian",with Queen Elizabeth II being relegated to a minor position,using a royal effigy by Arnold Machin.
The designs are said to feature themes and scenes of maritime Bermuda, and like their predecessors are coloured by value:
- $2: Blue; An Eastern Bluebird backed by a scene from the Royal Naval Dockyard.
- $5: Pink; An Atlantic blue marlin backed by the Somerset Bridge
- $10: Purple; A Bermuda blue angelfish backed by the Deliverance and a scene from the Royal Naval Dockyard.
- $20: Green; A green "whistling frog", distinct from the local brown Eleutherodactylus johnstonei and Eleutherodactylus gossei, backed by Gibbs Hill Lighthouse and a church.
- $50: Yellow; A Red-billed Tropicbird backed by a church; this bird is not native to, nor in any way common on, Bermuda.
- $100: Red; A red cardinal bird backed by the House of Assembly of Bermuda
The first $1 million batch of new notes has been slated for release in early 2009.
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