Currency of Colombia

The royalists contributed to the monetary chaos during the wars for independence by making several necessity issues of coins with a reduced silver content.

The royalists produced copper coins at Popayán during the war of independence: The Spanish occupied Santa Marta in May 1812 (until 1818).

The republicans minted coins of poor quality during the war of independence in order to pay the troops and cover military expenses.

Finally, the government agreed (2 April 1813) to exchange the notes for treasury certificates paying 5% and renewable every four months.

Copper coin, minted 1811–1815: An unknown quantity of currency notes for 1 real, printed in black on ordinary paper, signed by Germán Gutiérrez de Piñeres, chairman of the Junta Patriótica, was put into circulation in the latter half of 1812 and early in 1813.

The first issue was authorized by President Antonio Nariño to finance the Southern Campaign against the Spanish, who had occupied Popayán, and its circulation was approved by the State of Cundinamarca on 27 September 1814.

[1]: pages 2–4 Soon after the Battle of Boyacá (7 August 1819), General Simón Bolívar authorized an emergency issue, which was produced by overstriking about 112 kg of royalist macuquinas.

[1]: page 5 The second Indian-head (India) issue was authorized by General Bolívar before he knew of the proclamation of the Republic of Colombia.

It encompassed modern-day Colombia, Venezuela, and Ecuador, and it retained the Spanish colonial monetary system, based on the silver peso and gold escudo.

Copper coins minted at Cartagena and Santa Marta, and silver of inferior quality was ordered withdrawn (29 September 1821), but the government lacked the resources needed to do this.

This move was supported by Antonio Nariño but opposed by Vice President Francisco de Paula Santander.

The monetary law of 4 April 1836 attempted to standardize the coinage by establishing uniform fineness, weight, value, type, and denominations.

The 1846 law provided that silver coins in circulation, Colombian and Granadian, continue to be accepted by all tax offices at face value.

Gold coin .900 fine dated 1857–1858 Peso = 10 Reales or Décimos = 100 Centavos The Granadine Confederation (Confederación Granadina) was proclaimed 1 April 1858, adopting a new constitution on 22 May.

The internal instability resulted in customs houses accepting Bank of England notes and the British sovereign as equal to 5 pesos, between 1861 and 1863.

A decree of 27 January 1862 authorized the exchange of treasury notes for silver coin, .666 fine, and guaranteed their withdrawal within one year.

Public offices were authorized to accept silver coins .666 fine in payment of taxes and fees until 1 September 1864.

In 1866, however, at the insistence of General Mosquera, Congress abandoned the theory of plurality of issue and again authorized the government to establish a national bank.

Gen Mosquera sanctioned (4 July 1866) the issue of Treasury notes, legal tender for all public debts except import dues.

On 12 June he further decreed the obligatory acceptance in public and private transactions of all coins .900, .835, and .666 fine minted by the former Republic of Colombia and by New Granada.

The first private Colombian bank, Banco de Bogotá, was established 15 November 1870 and began operations in 1871 with a capital of $235,000.

By 1886 some 36 private banks of issue had been founded, but they played a small part in note circulation because of the huge volume of government paper money.

The Núñez government raised a loan of 2.5 million pesos in New York (secured by the Panamá Railway) to establish Banco Nacional, which began operations in January 1881.

In 1893 it was learned that secret note issues had pushed circulation past 12 million pesos back in 1889, and Congress decided to liquidate Banco Nacional.

But the bank's existence was extended to 1 January 1896, while it issued another 5 million pesos to cover the costs of the 1895 civil war.

In 1898–1899 the Government put $22 million in notes of Banco Nacional into circulation (despite the fact that the bank no longer existed).

During the civil war the government issued 28 new Banco Nacional note types and overprinted about 48 different private banknotes for circulation.

Poor harvests in 1917 caused a slight drop in the exchange rate, but from 1918 the demand for Colombian exports combined with a forced reduction in imports resulted in peso appreciation.

The reform had the backing of the noted financial expert Edwin W. Kemmerer, who had been invited to advise on the US indemnity of $25 million for the loss of Panama.

Colombia abandoned a fixed IMF parity and introduced a fluctuating free market rate on 13 May 1955, set initially at 4.17 per US dollar.