The Palestine Currency Board: Its History and Finances

The British established the Mauritius Currency Board as the first currency board in 1849 and there have been more than 70 such currency boards since. The concept of the function of a currency board is not well known, as it is often thought of as a nation's central bank. A currency board is an institution that issues currency notes which are convertible on demand at a fixed rate into an anchor currency backed by underlying securities. In effect, the newly issued currency is essentially a copy or clone of the anchor currency. When the British defeated the Ottoman Turks and the armistice signed on October 31, 1918, Palestine, as part of the defeated Ottoman Empire, was administratively governed by the British, first as a military occupation, and then as a civilian Mandate granted them as a Trust by the League of Nations. Prior to 1927, Palestine had no currency that was solely its own, but rather the coins and banknotes of many other countries were used. The currencies were mostly those of Turkey, Egypt, France, Great Brit¬ain, India, Germany, Russia, Austria, and the United States. This book traces the need and development for a native Palestine currency, culminating with the formation of the Palestine Currency Board which administered the Palestine Mandate's new monetary system. Unlike Britain's imperial pound-shilling-pence monetary system, the newly created Palestine pound was a decimal system divided into 1,000 mils and used the British pound sterling as its anchor currency. Established June 15, 1926, the Palestine Currency Board remained in effect for 26 years until it was dissolved on March 31, 1952, nearly four years after the State of Israel was established on May 14, 1948. The foreword is written by Prof. Steve H. Hanke of The Johns Hopkins University, who is an internationally known authority on currency boards and their creation.283 pages52 images