Australian dollar – What is it, definition and concept

The Australian dollar is the official currency of the Commonwealth of Australia. This, encompassing Australian Antarctic Territories, Christmas Island, Cocos Islands, Heard and McDonald Islands and Norfolk Island. Furthermore, the independent territories of Kiribati, Nauru and Tuvalu have also adopted this currency.

In other words, the Australian dollar is the legal tender used in Australian government administered territories. However, it has also been adopted by other countries in Oceania.

The Australian dollar is divided into 100 cents. Its ISO code is AUD and its symbol, $, A $ and AUD. Its issuer is the Reserve Bank of Australia.

History of the Australian dollar

The Australian dollar entered circulation on February 14, 1966. Thus, it replaced the Australian pound, which was divided into 20 shillings and each shilling, in turn, 12 pence.

When the new currency was introduced, an exchange rate of two dollars per Australian pound was applied. That is, each dollar was worth 10 shillings.

It should be remembered that the old currency, the Australian pound, had been introduced in 1910, in parallel with the British pound. The value of both currencies distanced in 1931 due to a devaluation.

In that sense, we must recall another fact. In 1931, in the context of the Great Depression, the British pound was devalued 25%, when the British currency left the gold standard.

It was then that, in the 1930s, a commission commissioned by the Australian Government recommended a decimal monetary system where the currency was divided into 1,000 parts (not as the pound that each unit equaled to 20 shillings and 240 pence) .

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However, it was not until 1960 that a committee appointed by the Australian government came out in favor of the currency’s decimalization. Thus, after some years of evaluation, the Treasurer (or Minister of the Treasury) Harold Holt, in 1963, made the announcement of the introduction of the new currency for February 1966.

It should be noted that in 1966 Australia was part of the sterling zone (territories where the pound sterling was used as legal tender). Thus, an exchange rate of one Australian dollar was set for 8 British shillings. This is equivalent to saying that each British pound was equivalent to 2.5 Australian dollars. Subsequently, in 1967 Australia left the sterling zone.

Australian dollar banknotes and coins

The Australian dollar coins are 5, 10, 20 and 50 cents, and there are also Australian 1 and 2 dollar coins.

Also, the banknotes are in the denominations of 5, 10, 20, 50 and 100 Australian dollars.

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