Political sketch
An external territory of Australia.
Christmas Island, which lies south of western Java, was first sighted in 1615, and named on Christmas Day 1643 by the English captain William Mynors. In 1887, a British ship collected specimens of rock and soil. The British naturalist John Murray found them to be nearly pure phosphate of lime, which is used as fertilizer and in industrial chemistry. On 6 June 1888 the United Kingdom annexed the uninhabited island. The same year, George Clunies-Ross of the Cocos (Keeling) Islands established the first settlement, at Flying Fish Cove. Clunies-Ross and Murray received a 99-year lease from the British government to mine phosphate and cut timber. In 1900 Christmas Island was incorporated into the British crown colony of the Straits Settlements (Singapore and other cities). The Japanese occupied the island during the Second World War from 31 March 1942 until late 1945. In 1948 the governments of New Zealand and Australia acquired the interests and assets of the mining company established by Clunies-Ross and Murray.
In 1957 the government of Australia bought the island from the government of Singapore, and on 10 October 1958 the
island became an external territory of Australia. The population long consisted mainly of Chinese mining laborers recruited
from Malaysia, Singapore, and the Cocos (Keeling) Islands. By the early 1990s, the recoverable deposits of phosphate were
nearly exhausted. The population of is currently (2005) about 1,500 people, and in recent years tourism has become an
important industry; fishing is also important.
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.
Territories occupied by Japan during the Second World War:
During the Second World War, French Indochina (Cambodia, Laos, and Vietnam) and Thailand, though occupied by
Japanese troops, did not have Japanese occupation currency; rather, they paid a kind of ransom by creating domestic
currency and giving it to Japan to pay for local expenses. In Burma, Hong Kong, western Indonesia (Sumatra and Java), and
the Philippines, the Yokohama Specie Bank acted as the issuing agent of occupation currency and the de facto central bank.
The Bank of Taiwan had the same capacity in Oceania and eastern Indonesia. The Bank of Japan was made the central bank
for the Greater South East Asia Co-Prosperity Sphere by a Japanese law of July 1942, but Japanese occupation currencies
were not officially all pegged to one another and to the yen until 1943, when the rate was established at 1 Japanese yen = 1
military yen (China) = 1 Burmese rupee = 1 Javanese gulden = Malayan $1 = 1 Philippine peso = 1 Thai baht = 2 Japanese
Oceanic shillings, and 1 Indochinese piastre = 0.976 Japanese yen (Bányai 1974: 8). On 1 April 1942, Japan opened the
Southern Development Bank (Nampo Kaihatsu Kinko), which had its headquarters in Tokyo and, from 1 July 1942, a
primary regional office in Singapore (renamed Shonan by the Japanese). The Southern Development Bank became the
official central bank of the Japanese occupation at various dates in 1943 and 1944 for Malaysia, Indonesia, the Philippines,
and Singapore, but this was mainly an administrative change. Notes continued to be printed with the same appearance and
the Yokohama Specie Bank and Bank of Taiwan continued as the agents for issuing occupation currency and regulating
other banks. Although these currencies were part of a currency zone based on the Japanese yen, convertibility between any
pair of currencies was restricted. Taiwan, Korea, and Manchuria were also parts of the Japanese yen currency zone through
their older pegs to the yen.
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): One.
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).
Christmas Island. Gazette. 1968-present (irregular). Government Gazette. Christmas Island: Christmas Island Administrator.
--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.)
Christmas Island. Annual report. 1958/1960-present. Territory of Christmas Island: Report (1958/1960); Territory of Christmas Island: Annual Report (1960/1961-1977/1978); Christmas Island Annual Report (1978/1979-1984/1985); Christmas Island Services Corporation: Annual Report (1985/1986-present). Canberra: Commonwealth Government Printer (1958/1960-1977/1978); Australian Government Publishing Service (1978/1979-present).
Main secondary sources:
Bányai, Richard A. 1974. Money and Banking in China and Southeast Asia During the Japanese Military Occupation 1937-1945. Taipei: Tai Wan Enterprises Company, Limited.
Christmas Island Tourism Association. Web site, <http://www.christmas.net.au>, viewed 15 March 2005.
Fujita, Kazuya. 2003. "Japanese Military Currency (1937-1945): Quantities Printed and Issued." I.B.N.S. Journal (International Bank Note Society), v. 42, no. 3: 1-24. (Has information relevant to a number of countries occupied by Japanese forces during the Second World War.)
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 Christmas Island, but some information can be inferred from data on Australia.)
Monetary authorities: Christmas Island
| Dates | Type | Name | Source | Remarks |
| 1888
-30 March 1942 |
dollarization | used Straits dollar / Malay dollar from 1 January 1938? (issued by multiple free banks / by currency board Board of Commissioners of Currency, Straits Settlements [headquarters Singapore] alongside multiple free banks from 1 May 1899 / by currency board Board of Commissioners of Currency, Straits Settlements [headquarters Singapore] alone from 29 September 1909 / by currency board-like[recheck] Board of Commissioners of Currency, Straits Settlements [headquarters Singapore] from 1913 / by currency board Board of Commissioners of Currency, Straits Settlements [headquarters Singapore] from 1936/ by currency board Board of Commissioners of Currency, Malaya [headquarters Singapore] from 1 January 1938?) | Australia, report on Christmas Island, 1958/1960: 8 | The source notes the use of Malayan currency but does not give a precise date for when the practice began. The island was settled in 1888 and was assigned to the Straits Settlements (Singapore and other cities) in 1900. Christmas Island has never had its own coinage. |
| 31 March 1942
-31 March 1943 |
occupation currency alongside joint currency board (as part of a currency union) | Japanese (military) government (headquarters Tokyo, Japan) alongside Board of Commissioners of Currency, Malaya (headquarters Singapore) | Japanese military administration of Malaya and Singapore, decree law of 25 January 1942, published 23 February 1942, cited in Bányai (1974: 70) | Japanese forces captured the island during the Second World War. The decree law of 1942 allowed the continued use of the Malayan dollar in Malaya and Singapore. However, Malayan dollars soon went out of circulation there because they were hoarded as a more reliable store of value than Japanese military currency. It is not clear what the situation was on Christmas Island. |
| 1 April 1943
-September 1945 |
occupation currency (issued by joint central bank as part of a currency union) | Nampo Kaihatsu Kinko (Southern Development Bank) (headquarters Tokyo, Japan) | Japan, law of 20 February 1942 establishing Southern Development Bank; decree? of 26 March 1943 allowing it to issue notes; both cited in Fujita (2003: 10) | The Southern Development Bank was the Japanese occupation central bank for present-day Brunei, Burma, Indonesia, Malaysia, Philippines, and Singapore. Notes of the Malayan currency board no longer circulated, though they continued to be hoarded as stores of value. |
| September 1945
-9 October 1958 |
dollarization | Malayan dollar (issued by Board of Commissioners of Currency, Malaya / Board of Commissioners of Currency, Malaya and British Borneo from 1 January 1952 [headquarters Singapore]) | inferred from Australia, report on Christmas Island, 1958/1960: 8 | The island resumed its prewar monetary arrangement with the end of the Second World War and Japanese occupation. |
| 10 October 1958
-17 January 1968 |
dollarization (another type; simultaneous circulation of two currencies) | Australian pound / Australian dollar since 14 February 1966 (issued by central bank [with commercial banking functions] Commonweal th Bank of Australia [headquarters Sydney, Australia] / by central bank Reserve Bank of Australia [headquarters Sydney, Australia] from 14 January 1960) | Australia, report on Christmas Island, 1958/1960: 8 | After Australia bought the island, Australian currency became legal tender alongside Malayan currency. |
| 18 January 1968
-present (2005) |
dollarization (another type) | Australian dollar (issued by central bank Reserve Bank of Australia [headquarters Sydney, Australia]) | Christmas Island, Currency Ordinance 1967, cited in Australia, report on Christmas Island, 1967/1968: 9 | Malayan currency ceased to be legal tender. The first bank was either the Commonwealth Bank of Australia (headquarters Sydney, Australia), or one of the corporate ancestors of Westpac Banking Corporation (headquarters Sydney, Australia), in Flying Fish Cove, Christmas Island. Both banks have branches there as of 2005. |
Exchange rate arrangements: Christmas Island
| Dates | Official arrangement | Source | Unofficial arrangement, if different | Remarks |
| 1888
-30 March 1942 |
fixed; used Straits dollar / Malayan dollar from 1 January 1938? | Australia, report on Christmas Island, 1958/1960: 8 | The source notes the use of Malayan currency but does not give a precise dates. The island was settled in 1888. Christmas Island has never had its own coinage. | |
| 31 March 1942
-31 Mach 1943 |
pegged (as part of a currency union); Japanese military $1 = 1 Japanese yen = Malayan $1, alongside fixed; used Malayan dollar | Japanese military administration of Malaya and Singapore, decree law of 25 January 1942, published 23 February 1942, cited in Bányai (1974: 70) | Convertibility into Japanese yen was in practice restricted. | Japanese forces capture the island during the Second World War. In Singapore, the Malayan dollar continued to be accepted by Japanese occupation forces, though it was inconvertible into pounds sterling. The currency board held its assets in London for safekeeping during the war. Convertibility into the Japanese yen was limited. The decree law of 1942 allowed the continued use of the Malayan dollar. However, Malayan dollars soon went out of circulation because they were hoarded as a more reliable store of value than Japanese military currency. The prewar exchange rate had been about 2 Japanese yen = Malayan $1. |
| 1 April 1943
-September 1945 |
pegged (as part of a currency union); Southern Development Bank $1 = 1 Japanese yen | Japan, law of 20 February 1942 establishing Southern Development Bank; decree? of 26 March 1943 allowing it to issue notes; both cited in Fujita (2003: 10) | Convertibility into Japanese yen continued to be restricted. | The Southern Development Bank, the Japanese occupation central bank for southeast Asia, began issuing notes. Notes of the Malayan currency board no longer circulated, though they continued to be hoarded as stores of value. On the black market, the Southern Development Bank dollar depreciated rapidly against the still-hoarded Malayan dollar, to which it remained officially equal. |
| September 1945
-9 October 1958 |
fixed; used Malayan dollar | inferred from Australia, report on Christmas Island, 1958/1960: 8 | The island resumed its prewar monetary arrangement with the end of the Second World War and Japanese occupation. | |
| 10 October 1958
-13 February 1966 |
fixed (as part of a currency union with Australia); used Australian pound and Malayan dollar | Australia, report on Christmas Island, 1958/1960: 8 | See the tables for Australia and Malaysia for parallel market on their currencies. | After Australia bought the island, Australian currency became legal tender alongside Malayan currency. |
| 14 February 1966
-17 January 1968 |
fixed (as part of a currency union with Australia); used Australian dollar and Malayan dollar | Reserve Bank of Australia annual report, 30 June 1966: 27 | Australia introduced the decimalized Australian dollar to replace the Australian pound at Australian $2 = Australian £1. | |
| 18 January 1968
-present (2005) |
fixed (as part of a currency union); uses Australian dollar | Christmas Island, Currency Ordinance 1967, cited in Australia, report on Christmas Island, 1967/1968: 9 | Malayan currency ceased to be legal tender. |