Historical Sketch

In 1517 Egypt became a province of the Ottoman Empire. Since the mid-18th century, it gradually gained more and more independence under the local regent until, in the early 19th century, the local ruler became a hereditary Ottoman viceroy. In the second half of the 19th century, Egypt suffered several financial crises and came under French and British influence. During World War I, Great Britain established a protectorate and ousted the Turkish suzerainty. In 1922, the Kingdom of Egypt attained independence, but British and French influence persisted until the overthrow of the monarchy in 1952 and the subsequent Suez War. In the wake of the pan-Arab movement, Egypt merged with Syria in 1958 to form the United Arab Republic where also Libya was foreseen to join in. But before this happened, the confederation disintegrated already in 1961.

Monetary History Overview

During the Ottoman rule Egypt's monetary system had degraded, as it had been the case throughout the Empire. In 1834, the Egyptian regent (khedive) Mohammed Ali undertook a comprehensive coinage reform, ten years before sultan Abd al-Majid reformed the Turkish monetary system. The new Egyptian Pound was a bimetallic currency, based on a new gold coin and the silver Maria Theresia Thaler which had been dominating the payment transactions long since. The coin issue started in 1836, but their quantity was not sufficient, so that foreign gold and silver coins continued to circulate in large numbers. A first attempt at renovating the deteriorating monetary situation was started in the early 1860s. Under French influence in connection with construction of the Suez Canal, the Egyptian currency was supposed to align with the French Franc which required a slight reduction of the coin weights. The reform coinage was, however, not accepted by the population, and the silver coins were traded with a discount. Gold coins had not gone beyond the trial stage. In 1882, Great Britain occupied Egypt, initially maintaining Ottoman suzerainty until at the outbreak of the First World War, the "veiled" protectorate was made a formal one. The financial administration was mandated to the Bank of Egypt, a commercial bank under British management, which also held the right to issue paper money but did not exercise it. The Egyptian currency got pegged to the Pound Sterling in 1885, thus switching to the gold standard. All foreign silver coins were demonetized until 1887 while British, French and Turkish gold coins remained legal tender. In 1922, Egypt attained independence. The monetary situation did not change, the National Bank of Egypt, which had assumed the central bank role in 1898, remained under British control, and the Sterling peg did not change until the 1960s. The abolition of the monarchy and the Suez War spurred the nationalization of Egypt's financial sector. In 1961, the Central Bank of Egypt began operations, and a year later, the Pound repegged to the US Dollar after a 20% devaluation. In the late 1970s and early 1980s, another 60% devaluation was done in steps, and in 1987, the Dollar peg was severed, causing a 75% decline until the early 1990s. During the following decades, the exchange rate was managed closely until in 2016, it was set free. The result was a 60% dive until year end. Since then, the Pound has remained more or less stable.

Egypt joined the International Monetary Fund (IMF) on 27.12.1945 as a founding member.

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