Economics

What Is the Currency of the Marshall Islands?

The official currency of the Marshall Islands is the United States dollar.

The Marshall Islands is an island nation located in the Pacific Ocean near the equator. The Republic of the Marshall Islands, as it is officially known, is part of a group of islands known as Micronesia. It is made up of 29 coral atolls, comprising of 1,156 islands and islets. The currency of the Marshall Islands is the United States dollar. The US dollar is also known as the American dollar. It is abbreviated as USD or US$ and is subdivided into 100 cents. The US dollar is among the most traded currencies in the world’s foreign exchange markets.

History of the US Dollar

Between the 16th and 19th century, the US dollar was minted by the United States Mint and resembled the Spanish dollar in size and composition. The US silver dollar, Spanish dollar, and Mexican peso circulated concurrently in the United States. It was not until the enactment of the Coinage Act of 1792 that the United States dollar was set as the country's official currency and pegged to the Spanish milled dollar. The United States currency used at this time did not exhibit images of presidents. The practice of inscribing the faces of presidents on the US dollar began in the 20th century.

During the American Revolution, the free colonies issued pre-decimal currency paper money to pay for military expeditions. Similarly, the Continental Congress issued a continental currency, which was denominated in Spanish dollars. During the American Revolution, however, the continental currency depreciated and was later replaced by silver dollars. The Legal Tender Act of 1862 resulted in the introduction of US banknotes which were legal tender. The notes later depreciated due to the continued circulation of silver and gold coins. In 1875, congress passed a law requiring the treasury to permit US notes to be redeemed for gold. In 1900, the bimetallic standard was abandoned. As a result, the US dollar currently floats freely in the currency market.

Banknotes

According to the US Constitution, congress has the power to authorize the issuing of Federal Reserve Notes by the Federal Reserve Banks. Previously, denominations of $1, $2, $5, $10, $20, $50, $100, $500, $1,000, $10,000, and $100,000 were issued. After 1946, the Federal Reserve ceased production of notes denominated above $100. In 1969, (then) president Richard Nixon officially issued an order to withdraw notes in denominations of $500, $1,000, $10,000, and $100,000 from circulation. Currently, US dollar banknotes are available in denominations of $1, $2, $5, $10, $20, $50, and $100 dollar notes.

Coins

The first US coins were minted in 1792. In 1979, the Susan B. Anthony dollar coin was introduced but became unpopular with time. The Presidential $1 Coin Act of 2005 was passed in 2007, and resulted in the issuance of a new $1 dollar coin which featured portraits of presidents such as George Washington. One side of the coins features the face of a president, while the other side includes the Statue of Liberty. The coins which are currently used in the Marshall Islands are 1, 5, 10, 25, and 50 cents. However, the 50 cent coin is rarely used by the public. The coins are legal tender and have both numismatic and precious metals value.

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