Historical Sketch

The Spanish conquest of Yucatán began in 1527 and lasted until 1544, the colonial control remained however weak, and larger settlements were prevented by the hostile climate. Along the coast, piracy was wide-spread, and in the 17th century, the timber trade of the local logwood (Campeche) tree became increasingly important. In 1631, an English company obtained a royal charter for its exploitation, which initiated the British settlement. No colonial structures were introduced at the time, the so-called "Bay (of Honduras) Settlements" were administered out of Jamaica. The Anglo-Guatemalan Border Convention of 1859 resolved the territorial conflict with the successor of the Spanish colonial empire, at least for the moment, so that in 1862, the crown colony of British Honduras got established. In 1940, Guatemala withdrew from the border convention and re-established its claim on the territory. In the mid-1950s began the emancipation from colonial rule, which led to internal self-government for British Honduras in 1964. In June 1973, the colony was renamed Belize, and in 1981 full independence was attained. Guatemala finally gave up its territorial claims and recognized Belize's independence in 1992.

Monetary History Overview

The economy of the 18th century British Bay Settlements was based on timber exploitation, and the scarcity of specie coinage led to the factual adoption of timber as unit of account, the so-called "Bay Currency". In 1785, the "Bay Currency" was abolished and replaced by Jamaican accounting. In Jamaica, like elsewhere in the Caribbean, the Spanish Dollar was the base of the circulating medium, grossly over-valued compared with the Sterling valuation. In 1839, Jamaica abolished its inflated accounting currency and switched to Sterling. As the Spanish Dollar had been traded at 83⅓ Pence accounting, the step amounted to a devaluation by 40%. The Bay Settlements of later British Honduras kept the accounting standard until in 1855. Unlike Jamaica, the Pound Sterling was not chosen as the new unit of account, but the 1st Belizean Dollar of 48 Pence Sterling. It differed from the "Dollar" of 50 Pence Sterling conveniently used in the other British Caribbean territories. The monetary economy remained weak, and the majority of transactions were done in barter or using coins flowing in from neighbouring Guatemala and Mexico. In 1887, the Dollar severed the link to the British currency and became equal to the Guatemalan Peso in silver. The Latin American silver coins that did not correspond to the French standard, notably the Mexican Pesos, were demonetized within two weeks. In 1894, the colonial administration revised the monetary situation. A Currency Commission was established which decided to abolish the silver currency and to adopt the US American gold standard instead. The 2nd Belizean Dollar was identical to the US Dollar in gold, and US gold coins had unlimited legal tender status. The Currency Commission began issuing government paper money and local subsidiary coins. The Dollar peg remained unchanged until end 1949, when pressure from the local economy triggered a devaluation parallel to the Pound Sterling which had occurred a couple of months before. The opposite development occurred in May 1976, when the continued decline of the British Pound triggered a switch back to US Dollar as anchor currency. In November of the same year, the Monetary Authority succeeded the Currency Commission as issuing institute. Immediately after independence in September 1981, the Central Bank of Belize began operations. The monetary policy based on the US Dollar peg has continued unchanged since then.

Belize joined the International Monetary Fund (IMF) on 16.03.1982.

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