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Australian dollar

From Academic Kids

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Polymer.jpg
Australian one-hundred dollar note

The Australian dollar, AUD or A$, is the official currency of the Commonwealth of Australia, including the Australian Antarctic Territory, Christmas Island, Cocos (Keeling) Islands, Heard Island and McDonald Islands and Norfolk Island, as well as the independent Pacific island states of Kiribati, Nauru and Tuvalu. It is sometimes affectionately called the "Aussie battler"; during a low period (relative to the US dollar) around 2001 and 2002 the currency was sometimes locally called the "Pacific Peso."

The Australian dollar is currently the sixth most-traded currency in world foreign exchange markets (behind the U.S. dollar, yen, euro, British pound and Canadian dollar) accounting for approximately 4–5 percent of worldwide foreign exchange transactions. The Australian dollar is popular with currency traders due to the lack of government intervention in the exchange rate and higher interest rates than comparable economies.

Contents

Current banknotes and coins

Each Australian dollar is composed of 100 cents. The smallest coin in current circulation is equal to five cents, the one and two cent coins having been discontinued in 1990-92 and withdrawn from circulation. (Cash transactions are usually rounded to the nearest multiple of five cents, although some merchants round down instead.)

All Australian notes are made of polymer.

The coins and notes that became effective throughout the 1980s and 1990s and are currently in use are as follows:

  • One Dollar coin (first issued 1984) - a coin featuring five kangaroos and Elizabeth II - gold coloured
  • Two Dollar coin - (first issued 1988) - a coin featuring an Aboriginal elder and Elizabeth II - gold coloured
  • Five Dollar coin - (first issued 1988, then bi-annualy) - a coin featuring a theme and Elizabeth II - gold coloured
  • Five Dollar note - (first issued in 1992 Elizabeth II (front); Parliament House (reverse) - pink
  • Ten Dollar note (issued 1993) - Banjo Paterson (front); Dame Mary Gilmore (reverse) - blue
  • Twenty Dollar note (issued 1994) - Mary Reibey (front); John Flynn (reverse) - red
  • Fifty Dollar note (issued 1995) - David Unaipon (front); Edith Cowan (reverse) - yellow
  • One Hundred Dollar note (issued 1996) - Dame Nellie Melba (front); Sir John Monash (reverse) - green

The fractional coinage features the monarch on the obverse side, and Australian native animals on the reverse:

  • Five cent - smallest "silver" coin featuring an echidna
  • Ten cent - a lyrebird
  • Twenty cent - the platypus
  • Fifty cent - the Australian coat of arms. This large coin is dodecagonal (twelve-sided) cupro-nickel, it replaced a round silver 50 cent coin which, soon after issue, became far more valuable for its silver content than as a unit of currency.

In recent years, 20 and 50c as well as 1 and 5 dollar coins have also been issued featuring a variety of commemorative and United Nations "year of" themes.

The Australian five dollar coin, like the United States Two dollar note, is not a normal method of payment but is still legal tender.

All Australian notes are issued by the Reserve Bank of Australia. Australian coins are produced by the Royal Australian Mint.

History

The Australian dollar was introduced in 1966, not only replacing the Australian pound (long since distinct from the Pound Sterling) but also introducing a decimal system. The Australian Prime Minister Robert Menzies wished to name the currency "the Royal", and other names such as "the Austral" and "the Koala" were also proposed.

Due to Menzies' influence, the name "Royal" was settled upon, and trial designs were prepared and printed by the printing works of the Reserve Bank of Australia. The unusual choice of name for the currency proved unpopular, and it was later shelved in favour of "Dollar".

On February 14 1966 the Australian Dollar was introduced at a rate of two dollars per pound, or ten shillings per dollar.

Monetary history

In the early years after Australian Federation the British pound sterling was used as the national unit of account. Sterling circulated in conjunction with banknotes and bills of credit issued by private banks. Acceptance of Private Bank notes was not made compulsory by legal tender laws, but they were widely used and accepted. Queensland treasury notes were also in circulation and these were legal tender in Queensland.

In 1910 the federal government passed the "Australian Notes Act" which prohibited the circulation of State notes. Also passed in that year was the "Bank Notes Tax Act" which imposed a tax of ten per cent per annum on "all bank notes issued or re-issued by any bank in the Commonwealth after the commencement of this Act, and not redeemed". Both these acts remain on the statute books and perpetuate the prohibition of private currencies in Australia.

Also in 1910 a national currency was introduced by the Labor Government of Prime Minister Andrew Fisher. The new national currency was called the Australian pound consisting of twenty shillings each consisting of twelve pence. Monetary policy ensured that the Australian pound was fixed in value to the pound sterling. As such Australia was on the Gold Standard so long as Britain was.

In 1919, the pound sterling was removed from the gold standard. When it was returned to the gold standard in 1926 the sudden increase in its value (imposed by the nominated gold price) unleashed crushing deflationary pressures. Both the initial 1919 inflation and the subsequent 1926 deflation had far reaching economic effects throughout the remnants of the British empire, Australia and the world.

In January 1931, the Labor Government of Prime Minister James Scullin devalued the Australian pound by 25 per cent against pound sterling as an emergency measure during the Great Depression. 1 sterling became worth 1 5s. 0d. Australian (AUD$2.50). While this devaluation no doubt removed some of the deflationary pressures introduced five years earlier it would still have been disruptive.

In 1948, when the United Kingdom devalued the pound sterling against the U.S. dollar, Australian Prime Minister and Treasurer Ben Chifley followed suit so the Australian pound would not become over-valued in sterling zone countries, with which Australia did most of it external trade at the time. One Australian pound went from US$2.80 to US$2.24.

On February 14, 1966, a decimal currency, known as the Australian dollar, was introduced after years of planning. 1 became $2, ten shillings became $1, and one shilling became ten cents. Amounts less than a shilling were converted thus:

½d. = 1c 6½d. = 5c
1d. = 1c 7d. = 6c
1½d. = 1c 7½d. = 6c
2d. = 2c 8d. = 7c
2½d. = 2c 8½d. = 7c
3d. = 2c 9d. = 8c
3½d. = 3c 9½d. = 8c
4d. = 3c 10d. = 8c
4½d. = 4c 10½d. = 9c
5d. = 4c 11d. = 9c
5½d. = 5c 11½d. = 9c
6d. = 5c 12d. = 1 s. = 10c

In 1966 following the introduction of the Australian dollar the value of the national currency continued to be managed in accord with the Bretton Woods gold standard as it had been since 1944. Essentially the value of the Australian dollar was managed with reference to the value of gold, although in practice the US dollar was used.

In keeping with Australia's move to a metric system the value of the new Australian dollar was equivalent to one gram of gold.

In 1971 the U.S. government discontinued the practice of managing the value of the U.S. dollar with relation to the value of gold and from this point onward Australia slowly loosened its usage of U.S. dollar as a means of measuring value. However for more than a decade it continued to peg to the U.S. dollar using a moving peg.

In 1983, the Australian government "floated" the Australian dollar, meaning that it no longer managed its value by reference to the US dollar or any other foreign currency. Today the value of the Australian dollar is managed with almost exclusive reference to domestic measures of value such as the CPI (Consumer Price Index). The value of the Australian dollar relative to gold remains a significant financial indicator and the gold price is prominantly displayed in the mainstream financial media.

In 2001, the value of one Australian dollar went below 50 US cents for the first time. As of March 2005, the Australian dollar is worth about 77 US cents. In 1966 the Australian dollar was worth about 980 milligrams of gold. As of Feb, 2005, the Australian dollar is worth 57 milligrams of gold.

Polymer banknotes

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Australian_$10_note_1988.jpg
The first polymer banknote, the 1988 Australian $10 note

In 1988, the Reserve Bank of Australia issued a plastic, specifically polypropylene polymer banknote to commemorate the country's bicentenary of European settlement. These notes contained a transparent 'window' with a holographic image of Captain James Cook as a security feature. Australian currency was the first in the world to use such features in currency. Despite initial difficulties the Reserve Bank saw potential in the issue of plastic banknotes and commenced preparations for an entirely new series made from polymer. Today all Australian notes are made of polymer.

Images of banknotes
$5 banknote front
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$5 banknote front
$5 banknote back
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$5 banknote back
$10 banknote front
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$10 banknote front
$10 banknote back
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$10 banknote back
$20 banknote front
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$20 banknote front
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Australian_20note_back.jpg
$20 banknote back
$50 banknote front
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$50 banknote front
$50 banknote back
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$50 banknote back
$100 banknote front
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$100 banknote front
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Australian_100note_back.jpg
$100 banknote back

Issues of currency

In the lead up to Federation, the currency used in the Australian colonies was the Pound Sterling, divided into 20 Shillings, each of which was divided into 12 Pence. English silver and copper coins circulated alongside Australian minted gold sovereigns (worth one pound) and half sovereigns, as well as locally minted copper trade tokens. Banknotes were issued by private banks as well as certain colonial governments such as that of Queensland. Paper denominations ranged from 1 to 100 Pounds.

After Federation in 1901, the Australian government assumed the power to issue currency and began superscribing the private issues that were in circulation, in preparation for the issue of a domestic currency.

In 1910 the first truly national Australian silver coinage was introduced in denominations of threepence, sixpence, one shilling, and two shillings (one florin). Copper pennies and halfpennies followed in 1911. In 1937 a five shilling piece was issued to commemorate the coronation of King George VI. This coins proved unpopular and was discontinued shortly after being reissued in 1938.

In 1913 the first national banknotes were introduced in denominations of 10 shillings, and 1, 5, and 10 Pounds. 1914 saw the introduction of 20, 50, 100, and 1000 Pound notes. The 1000 Pound note only saw limited circulation and was later confined to inter-bank use. There are no uncancelled examples of this note known in private hands.

In the mid 1920s a modified 10 shilling (worded as "Half Sovereign"), and reduced size 1, 5, and 10 Pound notes were issued with the side profile of King George V on the face. These notes still referred to the currency's convertibility to gold on demand. A newer 1000 Pound note with the profile of George V was also prepared but never issued. An unissued printer's trial of this note was discovered in London in 1996 and subsequently sold for in excess of 200,000 Australian Dollars. Nonetheless this note is not recognised as a legitimate Australian banknote issue.

During the Great Depression Australian currency ceased to be redeemable for gold at the previously maintained rate of one gold sovereign for one pound currency. Subsequently a new series of Legal Tender notes were designed, once again bearing the portrait of King George V, in denominations of 10 Shillings and 1, 5 and 10 Pounds. These denominations and designs were maintained and modified to accommodate the portrait of King George VI in 1938.

Fifty pound note
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Fifty pound note

The coronation of Queen Elizabeth II in 1953 saw the issue of a new series with portrait of prominent persons in Australia's history.

A fifty pound note was also prepared with the portrait of Henry Parkes, but this note was never issued. A few specimen exist in private hands and are worth a great deal to collectors.

Another coin highly sought after by collectors is the Penny dated 1930. Its rarity is so well known amongst Australians, that demand for what is akin to a blue chip investment has pushed prices to approximately 35,000 Australian Dollars for an average standard example. A proof example of the same coin recently changed hands for over 400,000 Australian Dollars, making it the most expensive copper coin in the world.

Former banknotes and coins in decimal currency

There have been two basic issues of decimal currency. The first paper issues of Australian dollars, issued in 1966, featured portraits of the following persons:

Copper one cent and two cent coins were withdrawn from circulation in 1991. The one cent coin featured a sugar glider and the two cent coin a frill-necked lizard.

External links

  • The Reserve Bank of Australia (http://www.rba.gov.au/CurrencyNotes/KeyFacts/fact_sheet_notes.html) site gives further information about Australian currency (notes), including current banknote designs (http://www.rba.gov.au/CurrencyNotes/NotesInCirculation/index.html).
  • The Royal Australian Mint (http://www.ramint.gov.au/) site gives information on Australian coins, including current coin designs (http://www.ramint.gov.au/making_coins/default.cfm?DefaultPage=coin_designs.cfm).

(Note that a higher CPI figure indicates a reduction of value for the Australian dollar.)

See also

Template:AsianCurrenciesde:Australischer Dollar es:Dlar australiano fr:Dollar australien he:דולר אוסטרלי id:Dolar Australia it:Dollaro australiano ja:オーストラリア・ドル pl:Dolar australijski pt:Dlar australiano zh:澳大利亚元

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