BMD - Bermudian Dollar

Introduction on Bermudian Dollar

The Bermudian Dollar, denoted by the symbol $ and sometimes BD$ to distinguish it from other dollar currencies, is subdivided into 100 cents. It is issued and regulated by the Bermuda Monetary Authority (BMA), which is responsible for the issuance and management of the currency, ensuring the value of the Bermudian Dollar.

The history of Bermudian Dollar

Before issuing its own currency, Bermuda used various currencies, including British, American, and West Indian money. At that time, the region's economy relied heavily on international trade, necessitating the use of multiple currencies. 

In 1966, Bermuda considered introducing its own currency as Commonwealth nations and territories began transitioning to dollars instead of the British pound. By 1970, Bermuda officially released the Bermudian Dollar, with an exchange rate set at 1 Bermudian Dollar equal to 8 shillings and 4 pence. 

In 1969, the Bermudian government established the Bermuda Monetary Authority to manage and control the money supply. 

The introduction of the Bermudian Dollar marked a significant milestone in asserting Bermuda's financial and economic identity. The introduction of this new currency enabled increased financial autonomy while preserving a robust economic connection with the United States, thanks to its fixed exchange rate with the US Dollar.

Bermudian Dollar denominations

Currently, the denominations of the Bermudian Dollar in circulation include a range of notes and coins that cater to everyday transactions. 

Bermudian Dollar coins

Before the introduction of decimalization and the transition to the dollar, the Government of Bermuda had not produced its own coins, apart from the commemorative Bermudian crowns, for at least a century. 

These coins have a designated face value but are typically regarded more as collectibles or as a means of preserving value rather than for everyday transactions. These commemorative coins come in the following denominations:

• 1 cent (made of Copper-plated zinc, with image of wild hog on the reserve)

• 5 cents (made of Cupronickel, with image of angelfish on the reserve)

• 10 cents (made of Cupronickel, with image of Bermuda Easter lilies on the reserve)

• 25 cents (made of Cupronickel, with image of longtail in flight on the reserve)

• 50 dollar (made of Nickel–brass, with image of coat of arms of Bermuda on the reserve)

• 1 dollars (made of Nickel-brass, with image of Bermuda-fitted dinghy on the reserve)

• 5 dollars (made of Nickel-brass, with image of Bermuda map on the reserve)

Bermudian Dollar banknotes

There have been various designs and changes in denominations with the Bermudian Dollar banknotes. Notably, Bermuda announced a redesign of its banknotes to commemorate the 400th anniversary of the island in 2008. Currently, the Bermudian banknotes come in the following denominations:

• $2 (in turquoise with Bluebird as the observe and Dockyard Clock Tower and statue of Neptune as the reserve)

• $5 (in pink with Blue marlin as the observe and Horseshoe Bay Beach and Somerset Bridge as the reserve)

• $10 (in purple with Blue angelfish as the observe and Deliverance and Commissioner's House as the reserve)

• $20 (in green with Whistling frog as the observe and Gibbs Hill Lighthouse and St. Mark's Church as the reserve)

• $50 (in yellow with a longtail as the observe and St. Peter's Church as the reserve)

• $100 (in red with a Red cardinal as the observe and the House of Assembly of Bermuda as the reserve)

The exchange rate regime of the Bermuda Dollar (BMD)

Bermuda Monetary Authority currently implements a fixed exchange rate policy tied to the U.S. Dollar at a ratio of 1:1. This policy is based on a basket of currencies from countries with which Bermuda has trade partnerships, including loans, debt repayments, and investments. 

The goal of this policy is to maintain a stable exchange rate for the currency, effectively controlling inflation and promoting economic development.

History of the Bermuda Dollar Exchange Rate

The Bermuda Dollar has experienced several fluctuations in its exchange rate since its introduction.

• When launched in 1970, the Bermuda Dollar (BMD) was pegged to the US Dollar with exchange rate of 1 BMD = 1 USD. This BMD/USD exchange rate has remained fixed at 1:1, which helps reduce volatility and risk in transactions between the two countries.

• Despite maintaining a fixed rate against the USD, the value of the BMD can fluctuate against other currencies due to changes in the USD's exchange rate with those currencies in the market.

• In the long term, fluctuations in the global economy, U.S. trade and financial policies, and Bermuda's domestic economic situation can also significantly affect the value of the BMD.

Factors affecting the value Bermudian Dollar

The value of the Bermuda Dollar is influenced by several economic and financial factors, including:

• Global Economy: The value of the Bermuda Dollar is heavily influenced by the global economy and trade relationships. When there are economic challenges in Bermuda's primary trading partners, it can lead to a decrease in demand for exports, which, in turn, negatively impacts the value of the BMD.

• Monetary Policy of the Bermuda Government: The Bermuda government can intervene in the currency and foreign exchange markets to stabilize the value of the BMD.

• Global Gold Prices: The price of gold plays a crucial role in shaping Bermuda's monetary policy. When gold prices rise, the value of the Bermuda Dollar typically increases as well. To manage this appreciation and maintain currency stability, the central bank may choose to sell Bermuda Dollars.

• Bank Interest Rates: The central bank's interest rates have a direct influence on the value of the Bermuda Dollar. When interest rates rise, the value of the currency typically increases, and vice versa.

These factors interact to create fluctuations in the value of the Bermuda Dollar. To monitor the exchange rate of the Bermuda Dollar against other currencies worldwide, you can check statistical tables and conversion tools on relevant financial websites.