Decimal currency is the term used to describe any currency that is based on one basic unit of currency and a sub-unit which is a power of 10, most commonly 100.
Decimalisation is the process of converting an existing currency from traditional denominations to a decimal system.
The logical appeal of decimalisation in general has generally been much more popular in currency than in physical measurements, and few countries have coupled the two processes.
All countries that had non-decimal currencies have decimalised, at least in practice.
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Decimal currencies have sub-units based on a factor of 10. These are most commonly 100 sub-units to the base currency unit, but currencies based on 1000 sub-units also exist, especially in Arab countries.
For example:
Today, the only currencies which are not decimal are those that have no sub-units at all, except for:
Historically, non-decimal currencies were much more common, such as the British pound Sterling before decimalisation in 1971. Until 1971, the pound Sterling worked on a system of pence (12 to a shilling) and shillings (20 to a pound), plus other combinations (ha'pence, guinea, and crown); and in addition, until 1960 the penny was divided into 4 farthings. A pound could be subdivided in 19 different ways into integral numbers of pence (for example, 1/4, 1/5, 1/6, 1/8 and 1/10 of a pound were respectively 60, 48, 40, 30, and 24 pence) and in 8 additional ways into integral numbers of farthings (for example, 1/64 pound was 3 pence 3 farthings, written 3¾d).
Russia converted to a decimal currency in 1704, with the ruble being equal to 100 kopecks, thus making Russian ruble the world's first decimal currency.[1]
France introducing the franc in 1795 to replace the Livre tournois,[2] abolished during the French Revolution. France introduced decimalisation in a number of countries that it occupied during the Napoleonic period.
Sweden introduced decimal currency in 1855. The currency 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.
Cyprus decimalised the Cypriot pound in 1955 by dividing it into 1000 mils, later replaced by 100 cents.
On Decimal Day, 15 February 1971, the United Kingdom decimalised the pound sterling and the Republic of Ireland the Irish pound.
Malta decimalised its currency, the lira, in 1972.
In places where £sd was used, the decimalisation process either defines one new penny = 1⁄100 pound, where the main unit (the pound) is not changed; or a new main unit (such as the dollar), is introduced as a half pound, and one cent = 1⁄100 dollar.
The following table shows the conversion of common denominations of coins of the £sd system.
| Common name | Amount | New £p | New $¢ |
|---|---|---|---|
| Halfpenny | 1⁄2d. | 5⁄24p ≈ 0.208p | 5⁄12¢ ≈ 0.417¢ |
| Penny | 1d. | 5⁄12p ≈ 0.417p | 5⁄6¢ ≈ 0.833¢ |
| Threepence | 3d. | 1 1⁄4p | 2 1⁄2¢ = 2.5¢ |
| Sixpence | 6d. | 2 1⁄2p | 5¢ |
| Shilling | 1/- | 5p | 10¢ |
| Florin | 2/- | 10p | 20¢ |
| Half crown | 2/6 | 12 1⁄2p | 25¢ |
| Crown | 5/- | 25p | 50¢ |
| Half sovereign | 10/- | 50p | $1 |
| Sovereign | £1 | £1 | $2 |
The farthing, at 1/4 penny, was never converted, as it ceased to be legal tender a decade prior to decimalisation. In 1971, a new penny would have been worth 9.6 farthings.
The initial currency of the United States was of decimal denomination from the outset of home minted currency in 1792 with the dollar being equal to 100 cents, but other currencies were also accepted for some time after the standard was set. The Spanish dollar, a non-decimalized currency, was accepted as official currency in the U.S. alongside the U.S. dollar until 1857.
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.[3] In June 1851, the Canadian legislature revisited the issue, and passed legislation that required the provincial accounts to be kept in decimalised format; 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" not "Dollars".[4] 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:[5]
| Date | |
|---|---|
| Province of Canada | 1 August 1854 |
| Nova Scotia | 1 July 1860 (Ordered its first coinage in 1860, but they weren't shipped by the Royal Mint until 1862) |
| New Brunswick | 1 November 1860 (Like Nova Scotia, the coins were received in 1862) |
| Newfoundland | 1863 (Took effect in early 1865 and had different coinage from 1865 to 1947) |
| Vancouver Island | 1863 |
| British Columbia | 1865 |
| Manitoba | 1870 |
| Prince Edward Island | 1871 |
The colonial elite, the main advocates of decimalisation, based their case on two main arguments:[6] 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.[7]
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 decimalised in 1970 by introducing the Bermudian dollar equal to 8 shillings 4 pence (100 pence, effectively equal to the U.S. dollar under the Bretton Woods system).
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.[8] 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.
Australia decimalised on 14 February 1966, with the new Australian dollar equivalent to ten shillings or half an Australian pound in the previous currency. Since a shilling became equal to ten cents, the Australian cent was equal to 1.2 Australian pence, although they were usually exchanged on a 1:1 basis during the brief period when both were circulating.
New Zealand decimalised on 10 July 1967, with the New Zealand dollar replacing the New Zealand pound. The conversion rates were the same as Australia's - 10c to one shilling, one dollar to 10 shillings, and two dollars to one pound. Confusion was expected with twelve pence becoming ten cents, such as people expecting four cents' change from paying ten cents/one shilling for an item costing eight cents. To help avoid this, the Decimal Currency Board recommended on inter-currency transactions (e.g. paying 4c with £sd coins, or paying 4d with dollar coins) to pay to the next highest five cents or sixpence to get the correct change.
Sri Lanka (known in the West as Ceylon at that time) decimalised in 1869.
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=100fils in 1974 to replace former system of 1 rial = 40 buqsha = 80 halala = 160 zalat. The country is one of the last to convert its coinage.
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 new paisa = 1⁄100 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
| Rupee | Anna | Paisa | Pie | New paisa |
|---|---|---|---|---|
| 1⁄192 | 1⁄12 | 1⁄3 | 1 | 25⁄48 ≈ 0.5208 |
| 1⁄128 | 1⁄8 | 1⁄2 | 1 1⁄2 | 25⁄32 = 0.78125 |
| 1⁄64 | 1⁄4 | 1 | 3 | 1 9⁄16 = 1.5625 |
| 1⁄32 | 1⁄2 | 2 | 6 | 3 1⁄8 = 3.125 |
| 1⁄16 | 1 | 4 | 12 | 6 1⁄4 = 6.25 |
| 1⁄8 | 2 | 8 | 24 | 12 1⁄2 = 12.5 |
| 1⁄4 | 4 | 16 | 48 | 25 |
| 1⁄2 | 8 | 32 | 96 | 50 |
| 1 | 16 | 64 | 192 | 100 |
In the special context of stating the prices of stocks, traded almost always in blocks of one hundred or more shares and usually in blocks of many thousands, stock exchanges in the U.S. used eighths or sixteenths of dollars, until converting to decimals between September 2000 and April 2001.[9]
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 five units is quite 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, and coins denominated in khoums and iraimbilanja are no longer minted.
Before the introduction of physical euro notes and coins on 1 January 2002, the plans and experiences of various decimalisations, particularly decimalisation in the United Kingdom in 1971, were studied by the European Central Bank because many of the lessons learned could be applied to the introduction of the euro. For example, on how to educate the public (particularly the elderly), how long the transition was likely to take, the likely speed of uptake of the new currency, the likely effects on inflation for those currencies where one euro cent, the smallest circulating denomination of the new currency, was greater in value than the smallest coin in circulation before the transition and the likely criminal activities which might be attempted during the transition period.