Decimalisation

Last updated

Decimalisation (American English: Decimalization) is the conversion of a system of currency or of weights and measures to units related by powers of 10.

Contents

Most countries have decimalised their currencies, converting them from non-decimal sub-units to a decimal system, with one basic currency unit and sub-units that are to a power of 10, most commonly 100 and exceptionally 1000; and sometimes at the same time changing the name of the currency or the conversion rate to the new currency. Today, only two countries have non-decimal currencies: Mauritania, where 1 ouguiya = 5 khoums, and Madagascar, where 1 ariary = 5 iraimbilanja. [1] However, these are only theoretically non-decimal, as in both cases the value of the main unit is so low that the sub-units are too small to be of any practical use and coins of the sub-units are no longer used. Russia was the first country to convert to a decimal currency when it decimalised under Tsar Peter the Great in 1704, resulting in the ruble being equal to 100 kopeks. [2]

For weights and measures this is also called metrication, replacing traditional units that are related in other ways, such as those formed by successive doubling or halving, or by more arbitrary conversion factors. Units of physical measurement, such as length and mass, were decimalised with the introduction of the metric system, which has been adopted by almost all countries with the prominent exception of the United States and, to a lesser extent, the United Kingdom. Thus a kilometre is 1000 metres, while a mile is 1,760 yards. Electrical units are decimalised worldwide. Common units of time remain undecimalised; although an attempt was made during the French revolution, this proved to be unsuccessful and was quickly abandoned.

Currency decimalisation by region

Decimal currencies have sub-units based on a factor of 10. Most sub-units are 100th of the base currency unit, but currencies based on 1,000 sub-units also exist in several Arab countries.

Some countries changed the name of the base unit when they decimalised their currency, including:

Examples of currency decimilisation
New unit=×Old unitYear
German gold mark =13 Vereinsthaler 1873
South African rand =0.5 South African pound 1961
Australian dollar =0.5 Australian pound 1966
New Zealand dollar =0.5 New Zealand pound 1967
Fijian dollar =0.5 Fijian pound 1969
Nigerian naira =0.5 Nigerian pound 1973

Europe

Russia converted to a decimal currency under Tsar Peter the Great in 1704, with the ruble being equal to 100 kopeks, thus making the Russian ruble the world's first decimal currency. [2]

France introduced the franc in 1795 to replace the livre tournois, [3] abolished during the French Revolution. France introduced decimalisation in a number of countries that it invaded during the Napoleonic period.

Dutch guilder decimalised in 1817 (became equal to 100 centen instead of 20 stuivers = 160 duiten = 320 penningen), with the last pre-decimal coins withdrawn from circulation in 1848.

Sweden introduced decimal currency in 1855. The riksdaler was divided into 100 öre. The riksdaler was renamed krona in 1873.

The Austro-Hungarian Empire decimalised the Austro-Hungarian gulden in 1857, concurrent with its transition from the Conventionsthaler to the Vereinsthaler standard.

Spain introduced its decimal currency unit, the peseta, in 1868, replacing all previous currencies.

Cyprus decimalised the Cypriot pound in 1955, which comprised 1000 mils, later replaced by 100 cents.

The United Kingdom decimalised the pound sterling and Ireland decimalised the Irish pound in 1971. (See £sd and Decimal Day.)

Malta decimalised the lira in 1972.

Americas

North America

Decimalisation in Canada was complicated by the different jurisdictions before Confederation in 1867. In 1841, the united Province of Canada's Governor General, Lord Sydenham, argued for establishment of a bank that would issue dollar currency (the Canadian dollar). Francis Hincks, who would become the Province of Canada's Prime Minister in 1851, favoured the plan. Ultimately the provincial assembly rejected the proposal. [4] In June 1851, the Canadian legislature passed a law requiring provincial accounts to be kept decimalised as dollars and cents. The establishment of a central bank was not touched upon in the 1851 legislation. The British government delayed the implementation of the currency change on a technicality, wishing to distinguish the Canadian currency from the United States' currency by referencing the units as "Royals" rather than "Dollars". [5] The British delay was overcome by the Currency Act of 1 August 1854. In 1858, coins denominated in cents and imprinted with "Canada" were issued for the first time.

Decimalisation occurred in: [6]

DateNotes
Province of Canada 1 August 1854
Nova Scotia1 July 1860Ordered its first coinage in 1860, but the coins were not shipped by the Royal Mint until 1862
New Brunswick1 November 1860Like Nova Scotia, the coins were received in 1862
Newfoundland1866Took effect in early 1865 and had different coinage from 1865 to 1947
Vancouver Island1863
British Columbia1865
Manitoba1870
Prince Edward Island1871

The colonial elite, the main advocates of decimalisation, based their case on two main arguments: [7] The first was for facilitation of trade and economic ties with the United States, the colonies' largest trading partner; the second was to simplify calculations and reduce accounting errors. [8]

Mexico

The Mexican peso was formally decimalised in the 1860s with the introduction of coins denominated in centavos; however, the currency did not fully decimalise in practice immediately and pre-decimal reales were issued until 1897.

Bermuda

Bermuda decimalised in 1970, by introducing the Bermudian dollar equal to 8 shillings 4 pence (100 pence, effectively equal to the US dollar under the Bretton Woods system).

South America

• The Venezuelan peso decimalised in 1843.
• The Colombian peso decimalised in 1847 (became equal to 10 décimos instead of 8 reales, later became equal to 100 centavos).
• The Chilean peso decimalised in 1851 (became equal to 10 décimos or 100 centavos instead of 8 reales).
• The Peruvian sol decimalised in 1863 (equal to 10 dineros or 100 centavos).
• The Paraguayan peso decimalised in 1870 (became equal to 100 centésimos, later centavos, instead of 8 reales).
• The Ecuadorian peso decimalised in 1871.
• The Argentine peso decimalised in 1881.

Africa

South Africa

The rand was introduced on 14 February 1961. A Decimal Coinage Commission had been set up in 1956 to consider a move away from the denominations of pounds, shillings and pence, submitting its recommendation on 8 August 1958. [9] It replaced the South African pound as legal tender, at the rate of 2 rand = 1 pound or 10 shillings to the rand. Australia, New Zealand and Rhodesia also chose ten shillings as the base unit of their new currency.

Oceania

Australia and New Zealand

Australia decimalised on 14 February 1966, with the Australian dollars replacing the Australian pound. A television campaign containing a memorable jingle, sung to the tune of Click Go the Shears , was used to help the public to understand the changes. [10] New Zealand decimalised on 10 July 1967, with the New Zealand dollars replacing the New Zealand pound.

In both countries, the conversion rate was one pound to two dollars and 10 shillings to one dollar.

Conversion between £sd and \$c, Australia and New Zealand
£sd\$c
£50\$100
£10\$20
£5\$10
£1\$2
10 shillings\$1
5 shillings50 cents
2 shillings20 cents
1 shilling10 cents
6 pence5 cents
3 pence2.5 cents
1.2 pence1 cent
1 penny56 cent

To ease the transition, the new 5-cent, 10-cent and 20-cents coins were the same size and weight, and the new \$1, \$2, \$10 and \$20 banknotes (and the new \$100 banknote in New Zealand) were the same colour, as their pre-decimal equivalents. Because of the inexact conversion between cents and pence, people were advised to tender halfpenny, penny and threepence coins in multiples of sixpence (the lowest common multiple of both systems) during the transition. [11]

Asia

Sri Lanka (known as Ceylon at the time) decimalised in 1869.

King Chulalongkorn decimalised the Thai currency in 1897.

Iran decimalised its currency in 1932, with the rial, subdivided into 100 new dinars, replacing the qiran at par.

India changed from the rupee, anna, pie system to decimal currency on 1 April 1957.

Yemen Arab Republic introduced coinage system of 1 North Yemeni rial=100 fils in 1974, to replace former system of 1 rial = 40 buqsha = 80 halala = 160 zalat. The country was one of the last to convert its coinage.

Japan historically had two decimalisations of the yen, the sen (1/100) and the rin (1/1,000). However, they were taken out of circulation as of December 31, 1953, and all transactions are now conducted in round amounts of 1 yen or greater. [12]

Rupee-anna-paisa-pie conversion

In India, Pakistan, and other places where a system of 1 rupee = 16 annas = 64 paise = 192 pies was used, the decimalisation process defines 1 naya paisa = 1100 rupee. The following table shows the conversion of common denominations of coins issued in modern India and Pakistan. Bold denotes the actual denomination written on the coins

RupeeAnnaPaisaPieNaya paisa
11921121312548 ≈ 0.5208
112818121 122532 = 0.78125
16414131 916 = 1.5625
13212263 18 = 3.125
11614126 14 = 6.25
18282412 12 = 12.5
144164825
128329650
11664192100

Mauritania and Madagascar theoretically retain currencies with units whose values are in the ratio five to one: the Mauritanian ouguiya (MRO) is equivalent to five khoums, and the Malagasy ariary (MGA) to five iraimbilanja.

In practice, however, the value of each of these two larger units is very small: as of 2010, the MRO is traded against the euro at about 370 to one, and the MGA at about 2,900 to one. In each of these countries, the smaller denomination is no longer used (although there is still a "one-fifth ouguiya" coin), and coins denominated in khoums and iraimbilanja are no longer minted, but due to revaluation of the MRO was in effect in 2018, and the khoums is returned in minting.[ clarification needed ] Therefore, in practice, they are neither decimal nor non-decimal currencies as there is no sub-unit.

Non-currency cases

Securities

In the special context of quoting the prices of stocks, traded almost always in blocks of 100 or more shares and usually in blocks of many thousands, stock exchanges in the United States used eighths or sixteenths of dollars, until converting to decimals between September 2000 and April 2001. [13]

Similarly, in the UK, the prices of government securities continued to be quoted in multiples of 132 of a pound (7 12 d or 3 18 p) long after the currency was decimalised.

Metrication

The idea of measurement and currency systems where units are related by factors of ten was suggested by Simon Stevin who in 1585 first advocated the use of decimal numbers for everyday purposes. [14] The Metric system was developed in France in the 1790s as part of the reforms introduced during the French Revolution. Its adoption was gradual, both within France and in other countries, but its use is nearly universal today. One aspect of measurement decimalisation was the introduction of metric prefixes to derive bigger and smaller sizes from base unit names. Examples include kilo for 1000, hecto for 100, centi for 1/100 and milli for 1/1000. The list of metric prefixes has expanded in modern times to encompass a wider range of measurements.

While the common units of time, minute, hour, day, month and year, are not decimalised, there have been proposals for decimalisation of the time of day and decimal calendar systems. Astronomers use a decimalised Julian day number to record and predict events.

Related Research Articles

ISO 4217 is a standard published by International Organization for Standardization (ISO) that defines alpha codes and numeric codes for the representation of currencies and provides information about the relationships between individual currencies and their minor units. This data is published in three tables:

The shilling is a historical coin, and the name of a unit of modern currencies formerly used in Austria (Schilling), and in the United Kingdom, Australia, New Zealand and other British Commonwealth countries.

The cent is a monetary unit of many national currencies that equals ​1100 of the basic monetary unit.

Pound sterling, known in some contexts simply as the pound or sterling, is the official currency of the United Kingdom, Jersey, Guernsey, the Isle of Man, Gibraltar, South Georgia and the South Sandwich Islands, the British Antarctic Territory, and Tristan da Cunha. It is subdivided into 100 pence. The Pound sterling is the oldest currency in continuous use. Some nations that do not use sterling also have currencies called the pound.

The mill or mille () is a now-abstract unit of currency used sometimes in accounting. In the United States, it is a notional unit equivalent to a thousandth of a United States dollar. In the United Kingdom, it was proposed during the decades of discussion on the decimalisation of the pound as a ​11000 division of the pound sterling. Several other currencies used the mill, such as the Maltese lira.

The Belize dollar is the official currency in Belize. It is normally abbreviated with the dollar sign \$, or alternatively BZ\$ to distinguish it from other dollar-denominated currencies.

Decimal Day in the United Kingdom and in Ireland was the day on which each country decimalised its respective £sd currency of pounds, shillings, and pence.

£sd is the popular name for the pre-decimal currencies once common throughout Europe, especially in the British Isles and hence in several countries of the British Empire and subsequently the Commonwealth. The abbreviation originates from the Latin currency denominations librae, solidi, and denarii. In the United Kingdom, these were referred to as pounds, shillings, and pence.

Denomination is a proper description of a currency amount, usually for coins or banknotes. Denominations may also be used with other means of payment such as gift cards. For example, five euros is the denomination of a five-euro note.

The khoums is the subdivisory unit of the Mauritanian monetary system, the ouguiya. Five khoums make an ouguiya, hence one khoums can be expressed as 0.2 ouguiya.

The pound is the currency of Guernsey. Since 1921, Guernsey has been in currency union with the United Kingdom and the Guernsey pound is not a separate currency but is a local issue of banknotes and coins denominated in pound sterling, in a similar way to the banknotes issued in Scotland, England and Northern Ireland. It can be exchanged at par with other sterling coinage and notes.

Australian coins refers to the coins which are or were in use as Australian currency. During the early days of the colonies that formed Australia, foreign as well as British currency was used, but in 1910, a decade after federation, Australian coins were introduced. Australia used pounds, shillings and pence until 1966, when it adopted the decimal system with the Australian dollar divided into 100 cents. With the exception of the first Proclamation Coinage and the holey dollars, all Australian coins remain legal tender despite being withdrawn from circulation.

The ariary is the currency of Madagascar. It is subdivided into 5 iraimbilanja and is one of only two non-decimal currencies currently circulating. The names ariary and iraimbilanja derive from the pre-colonial currency, with ariary being the name for a silver dollar. Iraimbilanja means literally "one iron weight" and was the name of an old coin worth ​15 of an ariary.

A non-decimal currency is a currency that has sub-units that are a non-decimal fraction of the main unit, i.e. the number of sub-units in a main unit is not a power of 10. Historically, most currencies were non-decimal, though today virtually all are now decimal.

The Bermudian dollar is the official currency of the British Overseas Territory of Bermuda. It is subdivided into 100 cents. The Bermudian dollar is not normally traded outside Bermuda, and is pegged to the United States dollar at a one-to-one ratio. Both currencies circulate in Bermuda on an equal basis.

The dollar was the currency of the colony and, later, Dominion of Newfoundland from 1865 until 1949, when Newfoundland became a province of Canada. It was subdivided into 100 cents.

The pound was the unit of account for currency of the Canadas until 1858. It was subdivided into 20 shillings (s), each of 12 pence (d). In Lower Canada, the sou was used, worth ​12 penny. Although the pounds, shillings, and pence accounting system had its origins in the British pound sterling, the Canadian pound was never formally linked to the British currency.

Redenomination is the process of changing the face value of banknotes or coins in circulation. It may be done because inflation has made the currency unit so small that only large denominations of the currency are in circulation. In such cases the name of the currency may change or the original name may be used with a temporary qualifier such as "new". Redenomination may be done for other reasons such as changing over to a new currency such as the Euro or during decimalisation.

The history of Australian currency commences with the first European settlement of Australia on 26 January 1788. At the time, New South Wales was a British colony, and the English currency was in formal circulation, though the supply was insufficient and alternative forms of exchange were resorted to. A national Australian currency was created in 1910, as the Australian pound, which in 1966 was decimalised as the Australian dollar.

References

1. "Malagasy Ariary". famouswonders.com. Retrieved 2016-12-13.
2. The new Encyclopaedia. Britannica. Volume 25.1994
3. Gadoury, V. "Monnaies Françaises" p.48 (1999)
4. McCulloch, A. B. “Currency Conversion in British North America, 1760–1900.” Archivaria 16, (Summer 1983): 83-94.
5. Canadian Mint. “Currency Reforms, 1841 – 71.” A History of the Canadian Dollar. Ottawa: Canadian Mint, 2003.
6. Canadian Mint. “Currency Reforms, 1841 – 71.” A History of the Canadian Dollar. Ottawa: Canadian Mint, 2003.
7. Mushin, Jerry. “Twentieth Century Currency Reforms: A Comment.” Kyklos 50 (1997): 247 – 249.
8. W.T. Easterbrook and Hugh G.J. Aitken, Canadian Economic History (Toronto: University of Toronto Press, 1988), 381.
9. Mboweni, T.T. 2001. The Reserve Bank and the Rand: some historic reflections. Speech by the Governor of the Reserve Bank 29 Nov 2001. http://www.reservebank.co.za
10. "The Reserve Bank and Reform of the Currency: 1960–1988". Archived from the original on 2019-03-15.
11. "通貨の単位及び貨幣の発行等に関する法律". e-gov.go.jp. Archived from the original on 2013-02-08. Retrieved 2014-05-26.
12. "Simon Stevin (Dutch mathematician) - Britannica Online Encyclopedia". Britannica.com. Retrieved 2018-10-26.