Both Sides of The Coin: The Story of The Central Bank of Barbados 1972-2017

Chapter 1: Background to Establishment 3 Accordingly, by the beginning of the 1900s, Barbados, like many other colonial territories, was using mostly UK coin. However, this arrangement was unsatisfactory because of difficulties in getting the UK government to buy back surplus coin and its retention of the profit accruing from coin issued in the colonies (McClean, 1975, p.1). In effect, the colonies were buying coin from the UK at a price well in excess of its actual value but had no guarantee that the UK Government would even repurchase the coins at face value. Because of these shortcomings and to avoid a dependence on UK coin, the Caribbean colonies began to issue their own currency notes. The first to do so were the Turks and Caicos Islands, in 1902, followed by Trinidad and Tobago in 1906. After the First World War ended, the UK Imperial Government made another attempt to deal with the currency situation in the West Indian colonies. In 1922, the Ormsby-Gore Committee on West Indian Currency was established and a year later recommended the formation of a West Indian Currency Board fashioned after the currency board in West Africa. Greaves (1952/53) points out that this recommendation, though reasonable, was not accepted at the time because it was felt that the cost of withdrawing UK coin from circulation (estimated at £500,000) would be too burdensome on British taxpayers. In the meantime, all of the West Indian territories began to establish currency boards or authorities of one kind or another. Since they had no discretionary powers with respect to the issue and redemption of currency, one observer described them as automatic money-changers. The Barbados Currency Board was formed in 1937 and the Barbados currency notes issued a year later. These were the only issues of island currency apart from the note issue of 1706 which had been suppressed by the Imperial Government and the pennies and half-penny struck at the end of the 18th century. 4 In 1940/41 the Barbados Legislature enacted a law which made notes issued by the governments of British Guiana and Trinidad and Tobago legal tender in Barbados.