Pieces of eight, doubloons, pounds, and now Bermudian dollars. The evolution of currency in Bermuda has followed the country’s development from a small island to a global destination for tourists and global finance.
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- Bermudian dollar Symbol: $, BMD, or BD$
- Bermuda Currency Code: BMD
- Subunits: cents (1/100)
- Coins: 1, 5, 10, 25 cents, 1, 5, 10 rupees
- Banknotes: $2, $5, $10, $20, $50, $100
- Bermuda GDP (2016): USD1.427 billion
- Monetary Authority: Bermuda Monetary Authority
- Inflation: 2.4%
- Pegged to: USD (at a rate of 1 to 1)
- Restrictions: Not generally traded outside of Bermuda
Like most nearby island countries (read: Caribbean) the first currency used in Bermuda following the arrival of Europeans was the ubiquitous Spanish dollar, known as ‘pieces of eight’. The Spanish coins circulated well into the 19th century despite being under British rule. By 1826 however Britain resolved to introduce British sterling as the primary currency of many of its colonies, Bermuda among them.
An Imperial Order in Council – a type of legislation introduced in the name of the monarch – dictated that the new currency would come into effect in Bermuda at a rate of 1 Spanish dollar to 4 shillings and 4 pence sterling. Unfortunately for the British, the exchange rate did not reflect the true value of each currency and the sterling coinage proved unpopular.
The British had overvalued the pound, and so in order to save it new currency legislation was introduced which changed the rate of exchange to 1 Spanish dollar to 4 shilling and 2 pence. But it was too little too late. In Bermuda and much of the region an informal rate of 1 pound sterling to ¼ of a Spanish dollar prevailed.
It took until 1842 for legislation to mandate that the sterling was the official currency of Bermuda, but even then it circulated alongside Spanish doubloons which also had legal status. Over the middle part of the 19th century sterling became more widely used, only to fall out of favour due to a silver crisis which brought back the popularity of Spanish coins.
It took the 1882 ‘legal tender act’ to finally demonetise doubloons. This time it worked and the pound remained the currency of Bermuda until well into the 20th century. During this time Bermuda printed their own notes, but ultimately introduced its own currency in 1970. Until 1972 Bermuda’s new decimalised currency was pegged to the newly decimalised British pound.
In 1972 however Bermuda changed its peg to the USD which was now the preeminent global currency. It also made trade and tourism from the nearby United States much simpler. Today the official exchange rate remains 1 to 1, and only banks are legally entitled to change Bermudian dollars for American dollars.
|1 cent||Elizabeth II||Wild hog|
|5 cent||Elizabeth II||Angelfish|
|10 cent||Elizabeth II||Bermuda Easter lilies|
|25 cent||Elizabeth II||Longtail in flight|
|1 dollar||Elizabeth II||Map of Bermuda and cahow (1983) Bermuda-fitted Dinghy|
|$2||Bluebird||Dockyard clock tower and statue of Neptune||Turquoise|
|$5||Blue marlin||Horseshoe Bay and Somerset Bridge||Pink|
|$10||Blue angelfish||High Commissioner’s House||Purple|
|$20||Whistling frog||Gibbs Hill Lighthouse||Green|
|$50||Longtail||St. Peter’s Church||Yellow|
|$100||Red cardinal||House Assembly of Bermuda||Red|
The value of the Bermudan dollar is pegged to the USD. For Canadians that means you have to keep an eye on the greenback to know what the CAD to BMD rate is. Over the last few weeks the CAD has strengthened considerably.
Bermuda is one of the richest countries in the world per capita thanks primarily to two industries: tourism and financial services. Despite this 19% of the population was below the poverty line as of the year 2000. Tourism produces 28% of GDP through 360,000 luxury tourist facilities but the number of tourists is declining.
Agriculture meanwhile is hampered by the geography of Bermuda which has very little arable land, and industry is almost non-existent making the country heavily dependent on importing goods. The exception is ‘reexporting’ (charging low to no tariffs on importing from one country and then re-selling to countries with whom the original importer has trade deals with) pharmaceuticals. Bermuda has been accused of being a tax haven, which might explain its popularity amongst the rich and large corporations.
Bermuda is heavily dependent on imports, but with a strong financial sector and the Bermudan dollar tied to the USD it should be in a strong position. The peg to the USD is not likely to go anywhere soon as over 80% of tourists are from North America and the USD is the most important currency in global finance.
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