Discovering the Difference between a Belizean Dollar, American Dollar, and British Pound
The official currency of modern-day Belize is the Belizean dollar… yet visitors to the country will find that American dollars are accepted everywhere. This is largely because the Belizean dollar’s exchange rate has been fixed in a 2-to-1 ratio with the American dollar for going on 35 years.
But Belize was part of the British Commonwealth and was never a US colony. So how did this happen?
And if the country has such close monetary ties with the US, how did Belize dollars end up with a picture of the Queen of England on them?
The currency of Belize bears an intriguing history filled with the power struggles of the world’s largest political and economic forces.
From 1765 to 1873 (when Belize was still known as British Honduras), the currency of Belize was the Spanish dollar with a crowned King George of England stamped on it. The Spanish dollar was the currency most commonly used in the region, and the British opted to simply put the mark of their own king on it instead of sending over their own currency.
This changed, however, when Great Britain decided it was time to make more apparent their power over the colonies. In 1825, British Honduras (Belize) became one of the British colonies to adopt pound sterling coinage as its official legal tender. The exchange rate was set to four British shillings for every Spanish dollar, and the dollar was immediately outlawed in an attempt to rid the country of extra-British currency.
Unfortunately for Great Britain, a mistake in setting the exchange rate enabled the colonies to enjoy British sterling at a slightly inflated worth. By the time the British realized their mistake in 1838, it was too late to correct it — the Spanish dollar was outlawed and the colonies accustomed to the favorable exchange rate.
A Currency All Their Own… Sort Of
For nearly 50 years, the currency of British Honduras remained stably linked to Great Britain’s pound sterling, which was on the gold standard. This all changed in 1873, when the value of silver dropped dramatically, causing all currencies based on the silver standard to plummet in value as well. British pound sterling just became too expensive; consequently, the British Hondurans adopted Guatemala’s silver peso.
Not to lose power over British Honduras’ currency, and desperate to return the country to the gold standard, British authorities introduced the British Honduras dollar. Although it appeared as though Great Britain had given British Honduras its own tender, each piece of currency was still emblazoned in the British monarchy.
Based on the American dollar and its gold standard, the British Honduras dollar more closely resembled that of Canada (one of Great Britain’s other colonies) than pound sterling. In addition to the British Honduran dollar, bronze one-cent coins were issued in 1885, and by 1894 the system was rounded out with silver 5, 10, 25, and 50-cent coins, as well as the first banknotes. This was the beginning of a long relationship between the British Honduras dollar and the US dollar, though Great Britain still had a great influence over the colony’s currency values.
Every time the British pound sterling decreased in value between 1931 and 1967, British Honduras decreased its dollar accordingly. (The country was yet a colony of Great Britain and devaluing the British Honduran dollar would ensure favorable trade conditions for the British.)
Currency (Ex)Changes Wrought By Independence
The hold that Great Britain had over British Honduras’s currency evaporated during the colony’s journey toward independence. Although British Honduras was allowed to self-govern beginning in 1964, the country did not gain full independence until September 21, 1981. During those 17 years, British Honduras officially became Belize and ended the relationship between Belize dollars and the British pounds sterling.
In 1978, Belize pegged its dollar to the US dollar at an exchange rate of BZ$2 to US$1. This Belize exchange rate still exists today.
In 1981, as a way to make its new power known in the wake of independence, the Central Bank of Belize demonetized all of the currency that had been issued by the British-controlled Monetary Authority of Belize. The Central Bank began to issue the first official Belize currency notes in 1983, but they had the same design as those produced by the Monetary Authority — prominently featuring a portrait of the Queen of England.
As a member of the British Commonwealth, the currency of Belize still features the Queen. In May 1990, however, new Belize dollars were introduced that more accurately represent Belize history and culture. Now, in addition to the Queen of England’s portrait, money in Belize also has pictures and watermarks of the country’s unique wildlife and important historical and cultural sites.
The exchange rate and currency of Belize has had a long history heavily influenced by two of the world’s superpowers — Great Britain and the United States. And yet, despite the Belize exchange rate being tied to that of the United States and the currency bearing the face of Great Britain’s monarchy, the money in Belize reflects the country as it is today. So even though visitors are free to use US currency when visiting, there aren’t many better souvenirs to bring home than the colorful Belizean dollars that reflect so much of the country’s history and culture. After all, in spite of everything, the Belize dollar is purely Belize.