The Bermudian dollar

Who issues money in Bermuda

The Bermuda Monetary Authority Act, No. 57 of 20 February 1969, created the authority and changed the unit of account from the pound to the dollar. The authority issues the currency, manages exchange control transactions and regulates the island's banks, insurers, trust companies and investment businesses. It published a balance sheet in 1969 and issued its first money a year later, taking over the job from the ministry of finance.

Before it, Bermuda had almost no money of its own. The government treasury began issuing £1 notes on 1 March 1915 under the Government Notes Act, passed because war had caused a shortage of currency. The Bermuda Currency Notes Act of 23 July 1930 put those notes on explicit 100% sterling backing and set up the Bermuda Currency Commission, which issued notes until the authority replaced it on 6 February 1970. Coins came from Britain the whole time.

How sterling gave way to the dollar

Spanish silver dollars circulated in Bermuda before the colony formally made sterling its official currency on 1 January 1842. In 1874 the island's merchants agreed to turn away imported US currency except at a heavy discount. By 1882 pounds, shillings and pence were the only legal tender.

The pound stayed official until 1970, although the government issued its own pound notes. US and Canadian coins turned up in circulation, sterling looked likely to be devalued, and Bermuda moved to a decimal dollar of its own. It did so a year before Britain decimalised, which let Bermuda order coins from the Royal Mint ahead of other Commonwealth countries planning the same switch. The old notes and the British coins were demonetised in June 1970.

Why the dollar follows the US dollar

At its launch the Bermudian dollar equalled the US dollar only because sterling was itself pegged to it. Britain floated the pound on 23 June 1972, and within weeks the Bermudian dollar was worth more than the American one, which hurt American tourists and local retailers. On 28 July 1972 the governor ordered a new parity of 0.818513 grams of fine gold, equal at the time to one US dollar, and the link to sterling ended on 31 July. The Bermudian Dollar Parity Order of 22 May 1981 dropped the gold and fixed the currency at one US dollar.

Since 1972 Bermudian law has required businesses to price goods in Bermudian dollars and to accept US dollars for them one for one. Only banks may change Bermudian dollars into US dollars or other currencies, and a foreign currency purchase tax applies when they do.

A 2016 working paper by John Stanton for the Johns Hopkins Institute for Applied Economics tests Bermuda's system against the definition of a currency board, using a century of balance sheets. It finds that Bermuda ran one in the early twentieth century and describes the system since mid 1972 as a quasi currency board, because the authority may hold gold, securities in currencies other than sterling and local assets. For the later decades, the study says, the balance sheets make a firm verdict harder.

What the notes and coins carry

The authority's first coins, in 1970, came in 1, 5, 10, 25 and 50 cents. The cent began in bronze, moved to copper-plated steel in 1988 and to copper-plated zinc in 1991. Nickel-brass $1 and $5 coins followed in 1983. Collectors know the Bermuda triangles, commemorative gold and silver coins struck on lobed triangular planchets, in values divisible by three.

The government's first dollar notes of 1970 ran from $1 to $50 and were printed with Bermuda Government across the top; from 1974 the authority produced the notes itself, adding $100 in 1982 and $2 in 1988, when a coin replaced the $1 note. A redesigned series for Bermuda's 400th anniversary went into circulation on 9 March 2009, built on maritime themes, and the first million notes carried a Bermuda onion as the serial number prefix. Every older note left circulation on 1 January 2014. Polymer $2 and $5 notes followed in 2024.