Tables of Modern Monetary Systems by Kurt Schuler (Return to home page)


Cocos (Keeling) Islands

Political sketch

A shire (county) of Australia.

The uninhabited Cocos (Keeling) islands, which lie south of Sumatra, were discovered in 1609 by a mariner of the English East India Company. They were settled in 1826 by an English adventurer named Alexander Hare, who brought his Malay harem and slaves. In 1827 John Clunies-Ross settled with his family, improved the natural coconut groves, and brought additional Malays to work the land. The islands were declared a British possession in 1857. They were governed as part of Ceylon starting in 1878 and then as part of the Straits Settlements (Singapore and other cities) from 1886, when they were granted in perpetuity to the Clunies-Ross family. On 9 November 1914, during the First World War, an Australian warship sank a German warship near the islands. During the Second World War, the islands were attacked occasionally by Japanese planes but not invaded.

The islands became a possession of Australia on 23 November 1955. On 1 September 1978 John Cecil Clunies-Ross relinquished his authority over the islands to Australia. The Australian government introduced Australian currency and took steps toward establishing Cocos Malay self-government. On 4 April 1984 the residents voted to merge with Australia. The estimated population today (2005) is about 600 people. The economy is based on tourism, fishing, and agriculture, particularly coconuts.

Wars since 1500

Second World War in the Pacific, 1942-1945 (Japan against United Kingdom, United States, China, Australia, New Zealand, Netherlands, and allies).

Convertibility

The sterling area:

On 2 August 1914, soon after the First World War began, the United Kingdom issued a proclamation imposing a one-month moratorium of payment for bills of exchange accepted before 4 August; an act of 3 August 1914 gave legislative sanction to the proclamation. The moratorium was subsequently extended for a month and ended on 4 November 1914. Legally the pound sterling remained convertible into gold and could be exported, but the risk to shipping from German submarines made the cost of shipment prohibitive, so the United Kingdom was in effect off the gold standard. The British government refused to include private shipments of gold in its war-risk insurance scheme. After the war, the export of gold was prohibited from 1 April 1919 under regulations that were given statutory form in 1920. On 28 April 1925 the government announced that the act would not be renewed when it expired on 31 December 1925. On 13 May 1925 the United Kingdom resumed the gold standard.

The United Kingdom abandoned the gold standard on 21 September 1931. The currencies of British colonies were almost all linked to the pound sterling through currency boards; being on a sterling-exchange standard rather than a gold-exchange standard, they followed the pound sterling off gold. Over the next few years, some former British colonies (Australia, New Zealand, South Africa) and other countries that had important trade links with the United Kingdom switched from gold to the pound sterling as their official or actual anchor. The result was termed the sterling area. The United Kingdom imposed exchange controls on 4 September 1939, the day after entering the Second World War. Most countries that were not current or former British colonies soon left the sterling area. Among the remaining countries, both current- and capital-account transactions were free of restrictions within the sterling area, but were restricted in dealings with outside countries. After the Second World War, the United Kingdom returned to the gold standard under the Bretton Woods system. It removed exchange controls on 15 August 1947, but reimposed them on 20 August 1947 after suffering a large loss of foreign reserves. Sterling had a dual exchange rate from 1961 until the United Kingdom abolished exchange controls. The sterling area remained in existence because sterling was not fully convertible. It began to crumble after the United Kingdom again abandoned the gold standard on 23 June 1972. By January 1973 the sterling area had shrunk to the British Isles and a few small British colonies; even Hong Kong had abandoned sterling as its anchor currency. The United Kingdom abolished exchange controls on 24 October 1979, ending the sterling area.

Australia and territories using its currency:

Australia imposed exchange controls on 28 August 1939, shortly before the Second World War began. In January 1976 Australians became free to buy and sell gold in Australia; previously, they had been required to sell it to the central bank within one month. Australia removed most exchange controls on 12 December 1983, in conjunction with a managed float of the Australian dollar (Australia, Treasurer's announcement of 9 December 1983). On 1 July 1990 Australia abolished regulations pertaining to the export of Australian notes and coins.

Australia left the sterling area on 23 June 1972.

The monetary area of Australia included Papua and New Guinea from the First World War until Papua New Guinea left it on 1 January 1976.

Other

Defaults on or restructurings of debt to the private sector (mainly from Purcell and Kaufman 1993 and Standard & Poor's 2004): None.

Banking crises (data since 1970s mainly from Caprio and Klingebiel 1999 and Frydl 1999): None.

Frankel and Rose (1996) list of currency crashes: Country not listed.

No exchange rate data in Reinhart and Rogoff (2003).

References

Primary sources:

--Laws and decrees:

Australia. Gazette. 1901-present. Commonwealth of Australia Gazette (1901-1973; also titled Commonwealth Gazette); Australian Government Gazette (1973-1977); Commonwealth of Australia Gazette (1977-present). Canberra: Commonwealth Government Printer (1901-1979); Australian Government Publishing Service (1979-present).

Cocos (Keeling) Islands, 1976-present (irregular). Regulations. Canberra: Commonwealth Government Printer (1976-1978); Australian Government Publishing Service (1979-present).

--Publications of monetary authorities:

Commonwealth Bank of Australia. Annual report. 1912-1960. Aggregate Balance Sheet of the Commonwealth Bank of Australia (1912-1927); Balance Sheet of the Commonwealth Bank of Australia; and, Balance Sheet of the Commonwealth Savings Bank of Australia (1928-1941); Balance Sheet and Director's Report / Commonwealth Bank of Australia and Commonwealth Savings Bank of Australia (1942-1944); Report and Balance Sheets (1945-1959); Report and Financial Statements (1960). Sydney: Commonwealth Bank of Australia. (This report includes information about the Notes Issue Board during its existence from 1920-1924).

Commonwealth Bank of Australia. Bulletin. 1937-1959. Statistical Bulletin. Sydney: Commonwealth Bank of Australia.

Reserve Bank of Australia. Annual report. 1959/1960-present. Report and Financial Statements (1959/1960-1999); Annual Report (2000-present). Sydney: Reserve Bank of Australia.

Reserve Bank of Australia. Bulletin. 1960-present. Bulletin (1960-1981); Statistical Bulletin (1981-present). Sydney: Reserve Bank of Australia.

--Web site of the current monetary authority (viewed January 2005):

<http://www.rba.gov.au>

--Other publications or Web sites:

Australia. Official yearbook. 1901/1907-present. Official Yearbook of the Commonwealth of Australia (1901/1907-1972); Official Yearbook of Australia (1973-1977); Year Book, Australia (1978-present). Canberra: Commonwealth Bureau of Census and Statistics (1901/1907-1977); Australian Bureau of Statistics (1978-present). (Contains information on Australia and on Australian territories and mandates.)

Cocos (Keeling) Islands. Annual report. 1955/1957-present. Annual Report on the Territory of Cocos (Keeling) Islands (1955/1957-1974); Territory of Cocos (Keeling) Islands Report (1975-1977/1978); Cocos (Keeling) Islands Annual Report (1978/1979-present). Canberra: Commonwealth Government Printer (1955/1957-1977/1978); Australian Government Publishing Service (1978/1979-present).

Monetary Authority of Singapore, Web site, "Heritage Collection: the Currency History of Singapore," <http://www.mas.gov.sg/masmcm/bin/pt1Heritage_Collection1.htm>, viewed 18 March 2005.

Main secondary sources:

Bunce, Pauline. 1988. The Cocos (Keeling) Islands: Australian Atolls in the Indian Ocean. Milton, Queensland, Australia: Jacaranda Press. (I have not seen this.)

IMF ARER. 1950-present. International Monetary Fund. Annual Report on Exchange Restrictions (1950-1978), Annual Report on Exchange Arrangements and Exchange Restrictions (1979-1988), Exchange Arrangements and Exchange Restrictions: Annual Report (1989-present). Washington: International Monetary Fund. (Contains information on IMF member countries and some of their dependencies. No direct information on the Cocos Islands, but some information can be inferred from data on Australia.)

King, Frank H[enry] H[aviland]. 1957. Money in British East Asia. London: Her Majesty's Stationery Office. (Pages 25-6 briefly discuss the islands).

Shafer, Neil, and George S. Cuhaj. 2002. Standard Catalog of World Paper Money, Volume 1: Specialized Issues, 9^th edition. Iola, Wisconsin: Krause Publications.

Monetary authorities: Cocos (Keeling) Islands

Exchange rate arrangements: Cocos (Keeling) Islands