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


Swaziland

Political sketch

Independent from the United Kingdom on 6 September 1968.

The Bantu-speaking Swazi people reached Swaziland about 1770 from farther north. In 1846 their chief sought British aid against the Zulus. In 1888 European settlers in the area were granted a charter of self-government. Two years later the Swazi people consented to a provisional government composed of British, South African, and Swazi representatives. The Swazi refused a proposal to institute South African administration in 1893, but in 1894 signed an agreement establishing virtual administration by South Africa without annexation. In 1902 the British governor of what is now South Africa was empowered to administer Swaziland and to legislate by proclamation. In 1906 these powers were transferred to the high commissioner for Basutoland (now Lesotho), Bechuanaland (now Botswana), and Swaziland. In 1949 the United Kingdom rejected South Africa's request to administer Swaziland, which would in effect have made it part of South Africa.

Swaziland received limited self-government in 1963 and it became independent on 6 September 1968 as a constitutional monarchy. In 1973 and again in 1977 the king dismissed the parliament and abolished the constitution, which in both cases was replaced by a new one two years later. Swaziland has become more politically stable in recent years. Its economy is closely tied to that of South Africa. The main exports are soft drink concentrates, sugar, and wood pulp.

Wars since 1500

None.

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. On that date, Botswana, Lesotho, South Africa, and Swaziland ceased being members of the sterling area; so did Namibia (then South West Africa), since it was subject to South African exchange controls. 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.

The Rand Monetary Area (later Common Monetary Area):

Initially, Bechuanaland (now Botswana), Basutoland (now Lesotho), and Swaziland used South African currency and had no separate domestic units of account. Until 13 February 1961, South Africa's currency was called the pound; since 14 February 1961 it has been called the rand. In Namibia, then called South West Africa, three South African commercial bank issued notes from 1915 to 1961, but the unit of account was the South African pound; the other countries used notes issued by the South African Reserve Bank after it began issuing notes in 1922. These countries had a customs union and, by informal agreement, common exchange controls. Initially, South Africa paid no seigniorage to the other countries for using the rand. The Rand Monetary Area, established in 1974 (and renamed the Common Monetary Area from 1986) joined South Africa, Lesotho, Namibia, and Swaziland in a formal agreement. Botswana decided not to join, though it remained a member of the rand zone for purposes of exchange control until 1976. All the other countries now have their own currencies, equal to the South African rand, but South Africa still makes seigniorage payments to the other members of the zone based on estimated circulation of rand notes and coins within their territory.

South Africa imposed exchange controls for all countries outside the sterling area on 9 September 1939, shortly after the Second World War began. On 1 July 1949 it established a licensing system that restricted imports from the sterling area other than Northern and Southern Rhodesia (Zambia and Zimbabwe). Compulsory surrender of sterling area currencies existed from 21 February 1956-27 February 1957, and was reintroduced 8 May 1958. Exchange controls intensified during 1961 (the legislative basis for subsequent exchange control being South Africa, "Exchange Control Regulations, Orders and Rules 1961," Government Notices R1111 and R1112 of 1 December 1961, issued in terms of South Africa, Currency and Exchanges Act, Act No. 9 of 1933). South Africa has been liberalizing exchange controls since 1995, but some persist today (2005).

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): The central bank took over two banks in 1995.

Frankel and Rose (1996) list of currency crashes: 1984.

References

Primary sources:

--Laws and decrees:

Great Britain (United Kingdom). Gazette. 1665-present. Oxford Gazette (1996-1666); London Gazette (1666-present). Oxford (1665-1666); London (1666-present): His/Her Majesty's Stationery Office from 1903. Online at <http://www.gazettes.online.co.uk>; as of September 2005, gazettes since 1900 are available.

Great Britain (United Kingdom). High Commissioner for Basutoland, the Bechuanaland Protectorate and Swaziland. Gazette. 1910?-1963. Official Gazette of the High Commissioner for Basutoland, the Bechuanaland Protectorate and Swaziland. Pretorio: Government Printer. (Succeded by Swaziland gazette.)

South Africa. Gazette. 1901-1909. Official Gazette of the High Commissioner for South Africa. Pretoria: Government Printer. (Succeeded by Great Britain, High Commissioner's gazette.)

Swaziland. Gazette. 1963-present. Swaziland Government Gazette. Mbabane: Government Printer. (Successor to Great Britain, High Commissioner's gazette.)

--Publications of monetary authorities:

Central Bank of Swaziland. Annual report. 1979-present. Annual Report. Mbabane: Central Bank of Swaziland.

Central Bank of Swaziland. Bulletin. 1979/1980-present. Quarterly Review. Mbabane: Central Bank of Swaziland.

Monetary Authority of Swaziland. Annual report. 1974/1975-1978/1979. Annual Report for the Financial Year .... Mbabane: Mneary Authority of Swaziland.

South African Reserve Bank. Annual report. 1920/1921-present. Report of the First [etc.] Ordinary General Meeting (1920/1921-1981/1982); Report of the Sixty-Second [etc.] Ordinary General Meeting of Stockholders (1982/1983-1986/1987); Report of the Sixty-Eighth [etc.] Ordinary General Meeting of Shareholders (1987/1988-present). Pretoria: South African Reserve Bank. (Some years also in Afrikaans.)

South African Reserve Bank. Bulletin. 1946-present. Quarterly Bulletin of Statistics / Statistiese Kwartaalblad (1946-1965); Quarterly Bulletin / Kwartaalblad (1966-1999); Quarterly Bulletin (no Afrikaans text) (1999-pressent). Pretoria: South African Reserve Bank.

South African Reserve Bank. Economic report. 1960/1961-present. Annual Economic Report. Pretoria: South African Reserve Bank.

--Web site of the current monetary authority (viewed 20 September 2005):

<http://www.centralbank.org.sz>

--Other publications or Web sites:

South Africa. Official yearbook. 1917-1960, 1974-present. Union Office of Census and Statistics (1917-1949); Bureau of Census and Statistics (1950-1960): Department of Information (1974-1993); South African Communication Service (1994-present). Official Year Book of the Union (1917-1918); Official Year Book of the Union and of Basutoland, Bechuanaland Protectorate and Swaziland (1919-1960); South Africa 1974 [etc.]: Official Yearbook of the Republic of South Africa (1974-1993); South Africa Yearbook (1994-present). Pretoria: Government Printing and Stationery Office (1917-1960); South African State Department of Information (1974-1993); South African Communication Service (1994-present).

Main secondary sources:

Arndt, E[rnst] H[einrich] D[aniel]. 1928. Banking and Currency Development in South Africa (1652-1927) with an Appendix on the Rise of Savings Banking in South Africa. Cape Town: Juta and Company. (Little direct information on Swaziland, but quite detailed on South Africa, to which Swaziland has long been connected monetarily.)

De Kock, Gerhard [Petrus Christiaan]. 1954. A History of the South African Reserve Bank (1920-1954). Pretoria: J. L. van Schalk.

Chalmers, [Sir] Robert. 1893. A History of Currency in the British Colonies. London: Eyre and Spottiswoode for Her Majesty's Stationery Office. (No specific mention, but a discussion of South Africa, whose currency legislation applied to Swaziland.)

Collings, Francis d'A., and others. 1978. "The Rand and the Monetary Systems of Botswana, Lesotho and Swaziland." Journal of Modern African Studies, v. 16, no. 1, March: 97-121.

Crossley, [Sir] Julian [Stanley], and John Blandford. 1975. The DCO Story: A History of Banking in Many Countries 1925-71. London: Barclays Bank International. (Concerns Barclays Bank Dominion, Colonial and Overseas.)

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.)

Monetary authorities: Swaziland

Exchange rate arrangements: Swaziland