Constitutional basisSection 51(xii) of the Constitution of Australia gives the Commonwealth (federal) Parliament the power to legislate with respect to "currency, coinage, and legal tender". The currency power must be read in conjunction with other parts of the Constitution of Australia, Australian Constitution. Section 115 of the Constitution provides: "A State shall not coin money, nor make anything but gold and silver coin a legal tender in payment of debts." Under this provision the Perth Mint, owned by the Western Australian government, still produces gold and silver coins with legal tender status, the Australian Gold Nugget and Australian Silver Kookaburra. These, however, although having the status of legal tender, are almost never circulated or used in payment of debts, and are mostly considered bullion coins. Australian coins are now produced at the Royal Australian Mint in Canberra.
Early moves towards decimalisationBefore the adoption of the current Australian dollar in 1966, Australia's currency was the Australian pound, which like the British pound sterling was divided into 20 shillings and each shilling was divided into 12 pence, making a pound worth 240 pence. The Australian pound was introduced in 1910, at parity with the pound sterling. Its value diverged from the pound sterling in 1931 after the currency devaluation. In 1902, a select committee of the Australian House of Representatives, House of Representatives, chaired by George Edwards (Australian politician), George Edwards, had recommended that Australia adopt a decimal currency with the Florin (British coin), florin as its base. In 1937, the Banking Royal Commission appointed by the Lyons Government had recommended that Australia adopt "a system of decimal coinage … based upon the division of the Australian pound into 1000 parts".
Adoption of the dollarIn February 1959, Treasurer Harold Holt appointed a Decimal Currency Committee, chaired by Walter D. Scott, to examine the merits of decimalisation. The committee reported in August 1960 in favour of decimalisation and recommended that a new currency be introduced in February 1963, with the adoption to be modelled on South Africa's replacement of the South African pound with the South African rand, rand. The Menzies Government (1949–66), Menzies Government announced its support for decimalisation in July 1961, but delayed the process in order to give further consideration to the implementation process. In April 1963, Holt announced that a decimal currency was scheduled to be introduced in February 1966, with a base unit equal to ten shillings, and that a Decimal Currency Board would be established to oversee the transition process. A public consultation process was held in which over 1,000 names were suggested for the new currency. In June 1963, Holt announced that the new currency would be called the "royal". This met with widespread public disapproval, and three months later it was announced that it would instead be named the "dollar". The Australian pound was replaced by the Australian dollar on 14 February 1966 with the conversion rate of A$2 = A£1. Since Australia was still part of the fixed-exchange sterling area, the exchange rate was fixed to the pound sterling at a rate of A$1 = 8 U.K. shillings (A$2.50 = GB£1). In 1967, Australia effectively left the sterling area, when the pound sterling was devalued against the US dollar and the Australian dollar did not follow. It maintained its peg to the US dollar at the rate of A$1 = US$1.12.
CoinsIn 1966, coins were introduced in denominations of 1, 2, 5, 10, 20 and 50 cents. The initial 50-cent coins contained 80% silver and were withdrawn after a year when the intrinsic value of the silver content was found to considerably exceed the face value of the coins. One-dollar coins were introduced in 1984, followed by two-dollar coins in 1988 to replace the banknotes of that value, while the one- and two-cent coins were discontinued in 1991 and withdrawn from circulation. In commemoration of the 40th anniversary of decimal currency, the 2006 mint Proof coinage, proof and Coin grading, uncirculated sets included one- and two-cent coins. In early 2013, Australia's first triangular coin was introduced to mark the 25th anniversary of the opening of Parliament House. The silver $5 coin is 99.9% silver, and depicts Parliament House as viewed from one of its courtyards. Cash transactions are Swedish rounding, rounded to the nearest five cents. As with most public changes to currency systems, there has been a great amount of seignorage of the discontinued coins. All coins portray the reigning Australian Sovereign, Queen Elizabeth II, on the obverse, and are produced by the Royal Australian Mint. Australia has regularly issued commemorative 50-cent coins. The first was in 1970, commemorating James Cook's exploration along the east coast of the Australian continent, followed in 1977 by a coin for Queen Elizabeth II's Silver Jubilee of Elizabeth II, Silver Jubilee, the wedding of Charles, Prince of Wales and Diana, Princess of Wales, Lady Diana Spencer in 1981, the Brisbane Commonwealth Games in 1982, and the Australian Bicentenary in 1988. Issues expanded into greater numbers in the 1990s and the 21st century, responding to collector demand. Australia has also made special issues of 20-cent, one-dollar and two-dollar coins. Current Australian 5-, 10- and 20-cent coins are identical in size to the former Australian, New Zealand, and British sixpence, shilling, and two shilling (florin) coins. Pre-decimal Australian coins remain legal tender for their cent equivalents. In 1990 and 1993, the UK replaced these coins with smaller versions, as did New Zealand in 2006 – at the same time discontinuing the five-cent coin. With a mass of and a diameter of , the Australian 50-cent coin is one of the largest coins used in the world today. In circulation, the old New Zealand 5-, 10- and 20-cent coins were often mistaken for Australian coins of the same value, owing to their identical size and shape. Until the size of the New Zealand coins was changed in 2004, Australian coins below the dollar in value were in circulation in both countries. Still, some confusion occurs with the larger-denomination coins in the two countries; Australia's $1 coin is similar in size to New Zealand's $2 coin, and the New Zealand $1 coin is similar in size to Australia's $2 coin. As a result, Australian coins are occasionally found in New Zealand and vice versa.
First seriesThe first paper issues of the Australian dollar were issued in 1966. The $1, $2, $10 and $20 notes had exact equivalents in the former pound notes. The $5 note was issued in 1967, the $50 was issued in 1973 and the $100 was issued in 1984.
First polymer seriesThe first polymer banknotes were issued in 1988 by the Reserve Bank of Australia, specifically polypropylene polymer banknotes (produced by Note Printing Australia), to commemorate the bicentenary of European settlement in Australia. All Australian notes are now made of polymer. Australia was the first country to develop and use polymer notes.
Second polymer seriesOn 27 September 2012, the Reserve Bank of Australia stated that it had ordered work on a project to upgrade the current banknotes. The upgraded banknotes would incorporate a number of new future proof security features and include Braille dots for ease of use of the visually impaired. The first new banknotes (of the $5 denomination) were issued from 1 September 2016, and the other denominations were issued in the following years. A new series of notes are in the process of being introduced, starting with the $5 notes which were introduced on 1 September 2016. A new $10 note was released into circulation on 20 September 2017, and a new $50 note was released on 18 October 2018. The new $20 note was released into circulation on 9 October 2019, and the new $100 note was released on 29 October 2020.
ValueIn 1966, when the dollar was introduced, the international currency relationships were maintained under the Bretton Woods system, a fixed exchange rate system using a U.S. dollar standard. The Australian dollar, however, was effectively pegged to the British pound at an equivalent value of approximately 1 gram of gold. The highest valuation of the Australian dollar relative to the U.S. dollar was during the period of the peg to the U.S. dollar. On 9 September 1973, the peg was adjusted to US$1.4875, the fluctuation limits being changed to US$1.485–US$1.490; on both 7 December 1973 and 10 December 1973, the noon buying rate in New York City for cable transfers payable in foreign currencies reached its highest point of 1.4885 U.S. dollars to one dollar. On 12 December 1983, the dollar was floated, allowing its value to fluctuate dependent on supply and demand on international money markets. The decision was made on 8 December 1983 and announced on 9 December 1983. In the two decades that followed, its highest value relative to the US dollar was $0.881 in December 1988. The lowest ever value of the dollar after it was floated was 47.75 US cents in April 2001. It returned to above 96 US cents in June 2008, and reached 98.49 later that year. Although the value of the dollar fell significantly from this high towards the end of 2008, it gradually recovered in 2009 to 94 US cents. On 15 October 2010, the dollar reached parity with the US dollar for the first time since becoming a freely traded currency, trading above US$1 for a few seconds. The currency then traded above parity for a sustained period of several days in November, and fluctuated around that mark into 2011. On 27 July 2011, the dollar hit a record high since floating. It traded at a $1.1080 against the US dollar. Some commentators speculated that the value of the dollar in 2011 was related to Europe's sovereign debt crisis, and Australia's strong ties with material importers in Asia and in particular China. Economists posit that commodity prices are the dominant driver of the Australian dollar, and this means changes in exchange rates of the Australian dollar occur in ways opposite to many other currencies. For decades, Australia's balance of trade has depended primarily upon commodity exports such as minerals and agricultural products. This means the Australian dollar varies significantly during the business cycle, rallying during global booms as Australia exports raw materials, and falling during recessions as mineral prices slump or when domestic spending overshadows the export earnings outlook. This movement is in the opposite direction to other reserve currencies, which tend to be stronger during market slumps as traders move value from falling stocks into cash. The Australian dollar is a reserve currency and one of the most traded currencies in the world. Other factors in its popularity include a relative lack of central bank intervention, and general stability of the Australian economy and government. In January 2011 at the World Economic Forum in Davos, Switzerland, Alexey Ulyukaev announced that the Central Bank of Russia would begin keeping Australian dollar reserves.
Exchange rate policiesPrior to 1983, Australia maintained a fixed exchange rate. The first peg was between the Australian and British pounds, initially at par, and later at 0.8 GBP (16 shillings sterling). This reflected its historical ties as well as a view about the stability in value of the British pound. From 1946 to 1971, Australia maintained a peg under the Bretton Woods system, a fixed exchange rate system that pegged the U.S. dollar to gold, but the Australian dollar was effectively pegged to sterling until 1967. With the breakdown of the Bretton Woods system in 1971, Australia converted the traditional peg to a fluctuating rate against the US dollar. In September 1974, Australia valued the dollar against a basket of currencies called the trade weighted index (TWI) in an effort to reduce the fluctuations associated with its tie to the US dollar. The daily TWI valuation was changed in November 1976 to a periodically adjusted valuation. On 12 December 1983, the Australian Labor Party, Australian Labor government of Australia, government led by Prime Minister of Australia, Prime Minister Bob Hawke and Treasurer of Australia, Treasurer Paul Keating Floating exchange rate, floated the dollar, with the exchange rate reflecting the balance of payments and other market drivers.
Legal tenderAustralian notes are legal tender throughout Australia by virtue of the ''Reserve Bank Act 1959'', s.36(1), without an amount limit. The ''Currency Act 1965'' similarly provides that Australian coins intended for general circulation are also legal tender, but only for the following amounts: * 5¢, 10¢, 20¢, and 50¢ (of any combination): for payments not exceeding $5 * 1¢ and 2¢ coins (which have been withdrawn from circulation): for payments not exceeding 20¢ * $1 and $2 coins: for payments not exceeding 10 times the face value of a coin of the denomination concerned * Non-circulating $10 coins: for payments not exceeding $100 * Coins of other denominations: no lower limit The 1¢ and 2¢ coins were Withdrawal of low-denomination coins, withdrawn from circulation from February 1992 but remain legal tender. Although the ''Reserve Bank Act 1959'' and the ''Currency Act 1965'' establishes that Australian banknotes and coins have legal tender status, Australian banknotes and coins do not necessarily have to be used in transactions and refusal to accept payment in legal tender is not unlawful. It appears that a provider of goods or services is at liberty to set the commercial terms upon which payment will take place before the "contract" for supply of the goods or services is entered into. If a provider of goods or services specifies other means of payment prior to the contract, then there is usually no obligation for legal tender to be accepted as payment. This is the case even when an existing debt is involved. However, refusal to accept legal tender in payment of an existing debt, where no other means of payment/settlement has been specified in advance, conceivably could have consequences in legal proceedings.
Design and denominationsAustralia was the first country in the world to have a complete system of banknotes made from plastic (polymer). These notes provide much greater security against counterfeiting. The polymer notes are cleaner than paper notes, are more durable and easily recyclable. Australia's currency comprises coins of 5, 10, 20 and 50-cent and one and two-dollar denominations; and notes of 5, 10, 20, 50 and 100-dollar denominations. Shortly after the changeover, substantial counterfeiting of $10 notes was detected. This provided an impetus for the Reserve Bank of Australia to develop new note technologies jointly with the Commonwealth Scientific and Industrial Research Organisation. The revolutionary polymer notes were first introduced in 1988 with the issue of a commemorative $10 note, marking Australia's bicentenary by featuring the theme of settlement. The note depicted on one side a young male Aboriginal person in body paint, with other elements of Aboriginal culture. On the reverse side was the ship Supply from the First Fleet, with a background of Sydney Cove, as well as a group of people to illustrate the diverse backgrounds from which Australia has evolved over 200 years. * The $100 note features world-renowned soprano Nellie Melba, Dame Nellie Melba (1861–1931), and the distinguished soldier, engineer and administrator John Monash, General Sir John Monash (1865–1931). * The $50 note features Aboriginal writer and inventor David Unaipon (1872–1967), and Australia's first female parliamentarian, Edith Cowan (1861–1932). * The $20 note features the founder of the world's first aerial medical service (the Royal Flying Doctor Service of Australia), the John Flynn (minister), Reverend John Flynn (1880–1951), and Mary Reibey (1777–1855), who arrived in Australia as a convict in 1792 and went on to become a successful shipping magnate and philanthropist. * The $10 note features the poets Banjo Paterson, AB "Banjo" Paterson (1864–1941) and Mary Gilmore, Dame Mary Gilmore (1865–1962). This note incorporates micro-printed excerpts of Paterson's and Gilmore's work. On 17 February 2017, the Reserve Bank revealed the design of the new $10 banknote. * The $5 note features Her Majesty Queen Elizabeth II and Parliament House, Canberra, the national capital. (A special centenary issue of the $5 note featured Henry Parkes, Sir Henry Parkes and Catherine Helen Spence in 2001.) In 2015–2016 there was a petition to feature Fred Hollows on a new $5 note, the outcome of this campaign is yet to be announced. On 11 February 2016 it was announced that on 1 September 2016 a new $5 banknote would be released featuring a depiction of native Australian wattle and bird. On 12 April, the design of the new $5 banknote was released. Polymer note technology was developed by Australia, and Australia prints polymer banknotes for a number of other countries. In 1988, Australia introduced its first polymer bank note and in 1996, Australia became the first country in the world to have a complete series of polymer notes. Australia's notes are printed by Note Printing Australia, a wholly owned subsidiary of the Reserve Bank of Australia. Note Printing Australia prints polymer notes or simply supplies the polymer substrate for a growing number of other countries including Bangladesh, Brunei, Chile, Indonesia, Kuwait, Malaysia, Mexico, Nepal, New Zealand, Papua New Guinea, Romania, Samoa, Singapore, Solomon Islands, Sri Lanka, Thailand and Vietnam. Many other countries are showing a strong interest in the new technology. All Australian coins depict Queen Elizabeth II on the obverse, with different images on the reverse of each coin. * The $2 coin, which replaced the paper two dollar note in 1988, depicts an Aboriginal tribal elder set against a background of the Crux, Southern Cross and native grasstrees. (Designed by Horst Hahne) * The $1 coin, which replaced the paper $1 note in 1984, depicts five kangaroos. (Designed by Stuart Devlin) * The 50c coin carries the coat of arms of Australia: the six state badges on a central shield supported by a kangaroo and an emu, with a background of Acacia pycnantha, golden wattle, List of Australian floral emblems, Australia's floral emblem (Designed by Stuart Devlin) * The 20c coin carries a platypus, one of only two egg-laying mammals in the world. It has webbed feet and a duck-like bill that it uses to hunt for food along the bottom of streams and rivers. (Designed by Stuart Devlin) * The 10c coin features a male lyrebird dancing. A clever mimic, the lyrebird inhabits the dense, damp forests of Australia's eastern coast. (Designed by Stuart Devlin) * The 5c coin depicts an echidna, or spiny anteater, one of only two egg-laying mammal, the Platypus being the other. (Designed by Stuart Devlin) * The 2c coin (withdrawn from circulation since 1992) depicted a frilled-neck lizard. (Designed by Stuart Devlin) * The 1c coin (withdrawn from circulation since 1992) depicted a feather tailed glider (Designed by Stuart Devlin) The 5c, 10c, 20c, and 50c coins are made of cupronickel (75 percent copper and 25 percent nickel). The one and two dollar coins are made of aluminium bronze (92 percent copper, 6 per cent aluminium and 2 per cent nickel). The two dollar, one dollar, 50 and 20 cent circulating coins occasionally feature commemorative designs. Australia's coins are produced by the Royal Australian Mint, which is located in the nation's capital, Canberra. Since opening in 1965, the Mint has produced more than 14 billion circulating coins, and has the capacity to produce more than two million coins per day, or more than 600 million coins per year. The Royal Australian Mint has an international reputation for producing quality numismatic coins, and won an international award for 'Best Silver Coin 2006' for its Silver Kangaroo coin design.
Australian currency tactile featureIn early 2015 the Reserve Bank of Australia announced that a tactile feature would be added to all new notes. The tactile feature is an embossed feature to assist the Visual impairment, vision-impaired in identifying the denomination. A similar feature is used on the Canadian currency tactile feature, Canadian currency.
Current exchange rates
See also* Banking in Australia * Brass razoo * Coins of Australia * Economy of Australia * Note Printing Australia * Section 51 (xii) of the Constitution of Australia
Other main currencies* United States dollar * Euro * Japanese yen * Pound sterling * Canadian dollar * Swiss franc