What is the Currency of Tuvalu?

By Oishimaya Sen Nag on May 14 2018 in Economics

A 20-cent Tuvaluan coin from 1976.

The Polynesian island nation of Tuvalu is located in the Pacific Ocean. The country has a total area of 26 square km and hosts a population of about 10,640 people. Geographically, Tuvalu is a volcanic archipelago with six atolls and three reef islands.

The currency of Tuvalu is known as the Tuvaluan Dollar. However, the Tuvaluan Dollar is not an independent currency. The Australian Dollar has been the official currency of Tuvalu since 1966. The Tuvaluan Dollar is just a variation of the Australian Dollar and uses the currency code of TVD.

No Central Bank in Tuvalu

Unlike most other sovereign nations of the world, Tuvalu lacks a central bank or central monetary institution. The country, however, has the National Bank of Tuvalu that serves the government of the country. Accounts of important government institutions and foreign assets are held by this bank.

History of Currency Usage in Tuvalu

The concept of currency was introduced in Tuvalu by the Europeans who first reached Tuvalu in the 16th century. The Pound Sterling was initially used in the country prior to the introduction of the Australian dollar. For a period of time during the Second World War when the US occupied the islands, the use of the US dollar became popular in Tuvalu. Other currencies that have been used on the islands of Tuvalu include the Oceania pound and the banknotes of the Gilbert and Ellice Islands backed by the Yen and Pounds, respectively.

Coins of Tuvalu

Tuvalu’s first coins were launched following the stated independence of the country from colonial rule in 1976. The coins of seven different denominations, 1, 2, 5,10, 20, 50, and 1-dollar were initially introduced. These coins were designed by John Donald. Their design was based on an aquatic theme with all coins except the 1-cent coin exhibiting a marine creature native to the area. Although most of these coins were a copy of the Australian coins of the same denominations in terms of weight, size, and chemical composition, two of the coins were different. The 50-cent piece of the Tuvalu coin possesses a round shape while the Australian coin of the same denomination is dodecagonal. Also, the 1-dollar coin of Tuvalu was unique at its time as Australia and several other countries had not yet started to produce coins of such larger denominations. The 1-dollar Tuvaluan coin had nine sides representing the nine atolls and islands of the country. Currently, not all of the initial coin denominations are in use in Tuvalu. The 1-cent and 2-cent coins have been withdrawn from circulation since 1991.

Banknotes of Tuvalu

Tuvalu uses the Australian Dollar for its banknotes. The Australian banknotes have been used in the country both before and after independence. Although the one dollar banknote was initially introduced in Tuvalu, it was later withdrawn to encourage the people to instead use the coin of the same denomination.

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