The Vanuatu vatu

Who issues the vatu

Vanuatu became independent of Britain and France on 30 July 1980, and five months later Parliament approved the Central Bank Act, creating a public institution whose shares the Government holds in full. The bank opened on 1 January 1981, taking over the assets and liabilities of the Institut d'Emission, and its first job was the monetary reform announced on 16 December 1980.

For its first two or three years the bank did little besides issue and exchange currency, and the Banque de l'Indochine et de Suez acted as its agent for issuing it. By the end of 1987 it had taken over every central bank function from the Banque Indosuez Vanuatu.

An amendment in May 1989 renamed it the Reserve Bank of Vanuatu and gave it more authority over the supervision of banks.

What the vatu replaced

Two monies circulated in the New Hebrides: the New Hebrides franc and Australian currency, which was used in the islands under British control. The vatu was meant to replace both. The Central Bank issued its own vatu notes on 22 March 1982. From 1 April 1983 neither the franc notes nor Australian money were legal tender, although the bank went on giving value for franc notes.

The coins kept French proportions. The 1, 2 and 5 vatu matched the old 5, 10 and 20 centimes of the French franc in size and metal, and the 10, 20 and 50 vatu came closer to coins of similar value in New Caledonia and French Polynesia than to Australian ones.

Why people still count in dollars and shillings

From 1966 to 1973 the New Hebrides franc was pegged to the Australian dollar at 100 francs to the dollar. The habit outlived the peg: residents sometimes speak of a notional dollar of 100 vatu without meaning any country's currency, because it makes large sums easier to handle. In some of Vanuatu's languages 10 vatu is called a shilling and 200 vatu a pound; in Apma, 50 vatu is selen kalim, five shillings.

Traditional wealth runs alongside the cash. Many communities pay fines and bride prices in pigs, curved boars' tusks and long dyed mats, and vatu sometimes stands in for them, a substitution the National Council of Chiefs discourages. The Tangbunia bank on Pentecost Island keeps accounts in livatu, a unit equal to the value of one fully curved boar's tusk.

Which notes and coins circulate

The first notes, of 100, 500 and 1,000 vatu, appeared in 1982. A 100 vatu coin replaced the note in 1988, a 5,000 vatu note arrived in 1989, and after the Reserve Bank took over the note issue in 1993 it added a 200 vatu note in 1995 to cut the number of 100 vatu coins handed out in change. A polymer series followed on 9 June 2014, adding a 2,000 vatu note.

The Reserve Bank stopped issuing 1 and 2 vatu coins in 2011; they are still legal tender, but shops round cash sales to the nearest 5 vatu. A new set of 5, 10, 20, 50 and 100 vatu coins, struck by the Royal Australian Mint in 2015, shows an outrigger canoe, a coconut crab, chiefs, kava with a coconut, and the Parliament building.