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


Nauru

Political sketch

Also formerly known as Pleasant Island. Independent from Australia on 31 January 1968.

Nauru was probably settled by travelers drifting from other Pacific islands. In 1798 a British navigator visited the island; he named it Pleasant, because of the friendly welcome he received. Whalers often called there from the 1830s, and a number of European beachcombers settled on the island. From 1878 to 1888, local clans frequently warred using weapons supplied by Europeans. The strife led Nauru's German settlers to request its incorporation in Germany's Marshall Islands Protectorate, which occurred in 1888. The island gradually became known by its native name, Nauru. After the discovery of phosphate on the island in 1899, a British company began in 1906 to exploit the deposits, dividing the profits with a German firm. On 6 November 1914, during the First World War, Australian forces occupied Nauru. On 17 December 1920, the League of Nations granted Nauru as a joint mandate to Great Britain, New Zealand, and Australia. During the Second World War, a German raiding ship shelled the island in December 1940. Japanese forces occupied the island from 26 August 1942 to 13 September 1945. They deported 1,200 Nauruans, two-thirds of the population; only 737 returned. On 1 November 1947, Nauru became a United Nations trust territory under Australian administration.

Nauruans gained internal self-government in January 1966, and achieved control of phosphate mining in 1967. Nauru became independent of Australia on 31 January 1968. The government is democratic. Nauru's economy is based on phosphate mining, which, however, is winding down. Mining has left the interior of the island largely uninhabitable.

Wars since 1500

Civil war among tribes in 1860s-1870s; First World War in the Pacific, 1914 (United Kingdom, British Empire, France, United States, Japan, and their allies against Germany and its allies ); Second World War, 1940-1945 (Germany and Japan against United Kingdom, United States, China, Australia, New Zealand, Netherlands, and allies).

Convertibility

German colonies in the Pacific:

The First World War began in Europe on 1 August 1914. By November 1914, all German colonies in the Pacific had been captured by opposing forces. In the meantime, communications with Germany, including financial transactions, were blocked.

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 an embargo on shipments of gold from 14 July 1915, after the First World War had begun, through 24 April 1925 (Australia, proclamation of 14 July 1915). 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.

Australia imposed an embargo on shipments of gold from 14 July 1915, after the First World War had begun, through 24 April 1925 (Australia, proclamation of 14 July 1915). Australia imposed exchange controls on 28 August 1939, shortly before as 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): 2002-present (foreign currency bank debt).

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:

German New Guinea. Gazette. 1909-1914. Amtsblatt für das Schutzgebiet Deutsch-Neuguinea. Rabaul: Kaiserlichen Gouvernement in Rabaul. (Successor to Neu Guinea Compagnie gazette; succeeded after a lapse by Nauru gazette.)

Germany. Overseas gazette. 1890-1921. Deutsches Kolonialblatt. Issued by Kolonial-Abtheilung des Auswärtigen Amts (1890-1907); Reichs-Kolonialamt (1907-1919); Reichskolonialministerium (1919-1920); Kolonialzentralverwaltung, Reichsministerium für Wiederaufbau (1920-1921). Berlin: Ernst Siegfried Mittler und Sohn.

Germany. 1892-1910. Die deutsche Kolonialgesetzgebung. Sammlung der auf die deutschen Schutzgebiete bezüüglichen Gesetze, Verordnungen, Erlasse, und internationale Vereinbarungen mit Anmerkungen und Sachregister. Edited by various persons. Berlin: D. Reimer, later Ernst Siegfried Mittler und Sohn, later Alfred Zimmermann. (The first volume was published in 1898 but covers the period starting in 1892.)

Neu Guinea Compagnie. Gazette. 1886-1897? Verordnungsblatt für das Schutzgebiet der Neu Guinea Compagnie. Berlin: Neu Guinea Compagnie. (Succeeded by German New Guinea gazette.)

Nauru. Gazette. 1928-present. Government Gazette, Administration of Nauru (1928-1965); Territory of Nauru Gazette (1965-1968); Government Gazette, Republic of Nauru (1968-present). Nauru: Government Printer. (Successor to German New Guinea gazette.)

--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.

Neu Guinea Compagnie. 1979. German New Guinea: The Annual Reports. Edited and translated by Peter Sack and Dymphna Clark. Canberra: Australian National University Press. (The name of this company was sometimes spelled with hyphens between the first two words or between all three words, and the last word was sometimes spelled as beginning with a K.)

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.)

Australia. Report on Nauru. 1948/1949-1966/1968. Department of External Territories (1948/1949-1949/1950), Department of Territories (1950/1951-1964/1965), Report to the General Assembly of the United Nations on the Administration of the Territory of Nauru; Department of Territories, Administration of the Territory of Nauru : Report to the General Assembly of the United Nations (1965/1966-1966/1968). Canberra: Commonwealth Government Printing Office.

Nauru. Administrator. Report. 1920-1940. Report on the Administration of Nauru (1920-1924); Report to the Council of the League of Nations on the Administration of Nauru During the Year ... (1925-1940). Melbourne : A.J. Mullett, Govermment Printer (1920-1924); Printed and published for the Government of the Commonwealth of Australia by H. J. Green, Government. Printer for the State of Victoria (1925-1940).

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.

Deeken, Matthias. 1913. Das Geldwesen der deutschen Kolonien. Münster in Westfalen, Germany: Druck der Westfälischen Vereinsdruckerei.

Fabricius, Wilhelm. 1992. Nauru 1888-1900: An Account in German and English Based on Official Records of the Colonial Section of the German Foreign Office Held by the Deutsches Zeltralarchiv in Potsdam. Translated by Dymphna Clark and Stewart Firth. Canberra: Division of Pacific and Asian History, Research School of Pacific Studies, Australian National University.

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 Nauru, but some information can be inferred from data on Australia.)

Monetary authorities: Nauru

Exchange rate arrangements: Nauru