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The history of currency in Bahrain is an integral part of the
history of the country. It reflects not only the different stages of that
history, but also the strong links enjoyed by Bahrain with many different
countries in the world.
Few people spend much time actually examining the
money in their pockets. They take it for granted that their coins and bank notes
are, as they are supposed to be, representations of value in a currency that can
either be freely spent locally or exchanged for one or more types of foreign
currency to be used on their travels. People usually accept their money because
everyone else around them accepts it, and that acceptance is based on the firm
belief that a government treasury, central bank or monetary agency will manage
its economic and financial affairs in such a way that the currency will maintain
a stable value both locally and on the international foreign exchange markets.
The latter is particularly important in the context of a country's international
trade, affecting the competitiveness of its exports and the price of its
imports.
Throughout most of Bahrain's history, the currency struck within
the country was intended only for the use of its own people. External trade was
financed through a variety of means. These included direct barter of one
commodity for another through the popular trade coinages of the time, and by
letters of credit issued by one merchant in favour of another. A particularly
interesting example of the latter, which was discovered in Bahrain, is inscribed
on a stone, and is now preserved in the Bahrain National Museum. Exchange rates
were determined on a transaction by transaction basis, and coins from even the
most distant lands would be valued largely by the purity of their metal and
their total weight. Merchants and traders needed experience and judgment to make
their calculations yield them a profit. Much of the time they had to look at,
and evaluate, coins piece by piece. Thus they would have come to recognize a
very large number of them by sight, and could tell the difference between a good
coin and a bad one by the sound it made when bounced off or "rung" on a hard
surface.
Today trade is a simpler, but less romantic matter. Gold and
silver coins are no longer a normal medium of exchange, and even the use of
paper currency is being replaced by bank transfers and credit cards for many
transactions. Despite these developments, however, the role of the Central Bank
of Bahrain continues to be one of guaranteeing the maintenance of the security,
value and prestige enjoyed by the Bahraini Dinar. The CBB's prime objective lies
in making it possible for the people of Bahrain to look at their bank notes and
coins with confidence in their value and trust in their security.
Bahrain
was the first country in the Gulf to recognize the use of coinage as a means of
enhancing trading and financial activity in the very early days. Indeed, the use
of coinage made a strong contribution to Bahrain's early reputation as a
commercial centre. Strategically located on one of the worlds oldest trading
routes between East and West, Bahrain had already become an important transit
point offering traders a safe anchorage and a reliable supply of food and water,
while its coastal waters were the source of the world's finest pearls. Over the
centuries practically every form of money has passed through the hands of
Bahrain's merchants, enabling Bahrain to claim a unique economic and political
status in the region. The use of many forms of money continued up until 1965
after which Bahrain introduced its own currency, the Bahrain Dinar.
By
the time Bahrain became an independent state in 1971 it had already long been
established as a commercial centre. With its many assets-a favourable climate,
an excellent location between Western Europe and the Far East, a population
accustomed to extending warm hospitality to visitors from overseas, a business
community well versed in the ways of modern trade, and a Government eager to
encourage and support commerce and finance, the country was ideally placed to
emerge as the region's major international financial centre.
First Issue (1965)
Second Issue (1979)
Third Issue (1993)
Fourth Issue (2008)
"A very impressive trip to the historic past and heritage of Bahrain. A must
see for every visitor to Bahrain."
"Truly magnificent! A great tribute to
the people of Bahrain."
"Fascinating exhibition of a very interesting
subject."
Just some of the comments in the visitors' book at the Currency
Museum housed in the Central Bank of Bahrain (CBB), located in the Diplomatic
Area of Manama. The history of a country is often best represented in the
evolution of its money. Never was this truer than when delving into the history
and monies of Bahrain as so clearly demonstrated in the recent opening, to world
wide acclaim, of Bahrain's currency museum. Some four years in the making, the
museum opened in February 1999 and has attracted a stream of visitors ever
since. Visitors are led through a multi-media tour of the currency history of
Bahrain demonstrating the central role it has played throughout the history of
the Gulf. Some of the rarest coins in the Arab world are to be found in the
museum.
In addition to its coin and Bahraini banknotes in the museum a
new permanent stand of the first banknotes and coins issued by the central banks
of all the Gulf Cooperation Council countries has been added.
Given the
complexities involved in the use of many monies the Caliph 'Abd al-Malik bin
Marwan', decided to Arabise the language of administration, and introduced a
new, purely Islamic coinage in 77H/696AD. This new gold dinar, which can be seen
at the beginning of the exhibition, and is one of only nine known examples, bore
only inscriptions from the Holy Qur'an, emphasizing both the Unity of God and
the role of the Prophet Muhammad as the Messenger of God, with the date given,
for the first time, in the new Hijri era.
The first display cabinet
contains, examples of very early Islamic coins. At the time of the Prophet
Muhammad's birth, when the eastern world was divided between the Byzantine
Emperor Justin II (565-578 AD) and the Sasanian Khusraw I (531-579AD), the
accepted trade coins throughout the Arabian Peninsula were Byzantine Gold Solidi
and Sasanian Silver Drachms. A fine example of the Silver Drachms struck during
the Prophet's lifetime can be seen in this cabinet.
Visitors are then
taken on a tour illustrating the development of the early Islamic coinage
(945-1258 AD) and the Age of Islamic empires (1258-1689 AD). These coins are
characterized by their perfect design and Arabic calligraphy, reflecting the
power and prosperity of these empires.
Later cabinets display the foreign
collection of metal coins, which were in circulation in the Arabian Peninsula
during the 2500 year period from 550 BC to 1950 AD. These coins were widely used
initially because they carried some simple engravings, which helped
differentiate them, such as the picture of a lion or a bull, or a portrait of
Alexander the Great, and of other pictures of kings and rulers. Before the dawn
of Islam, Arab countries used several metal coins. However, most non-Islamic
coins disappeared by the end of the first Hijri century (7th century AD) and did
not reappear until the emergence of the Italian trade states at the end of the
8th century Hijri (14th century AD). The use of European metal coins increased
during the middle of the 13th century Hijri (18th century AD). At this time, the
Kingdom of Bahrain used the metal coins of British India as its official
currency. Otherwise, the most widely used metal coins in the Arab World during
that period were the Maria Theresa Dollar and the Indian copper Paisa, many
interesting examples of which are on display.
The early monetary history
of the Kingdom of Bahrain starts with the formation of the Bahrain Currency
Board in 1965. At that time the new Bahraini Dinar was put into circulation to
replace the Gulf Rupee, with each Dinar being equal to Ten Rupees. Bank notes of
BD10, BD5, BD1/2 and BD1/4 and 100 fils denominations were issued. Coins were
denominated in 100 Fils, 50 Fils, 25 Fils, 10 Fils, 5 Fils and one Fils. The
bank notes had the denomination and the emblem of the State on their face
together with the traditional sailing boat, a Dhow.
Many central banks
and monetary agencies around the world issue different types of gold and silver
coins and medals to mark various local and international occasions. The CBB, is
no exception, and it has implemented an active program in this area. At the
national level, the Bahrain Currency Board issued a gold medal in 1968 to mark
the opening of Isa Town. During 1971, the Board issued another gold medal to
mark the independence of the State of Bahrain from Great Britain. These medal
issues, alongside many others, are all displayed in the central display
section.
The museum also has a special gallery concentrating purely on
the activities of the Bahrain Currency Board and CBB. The gallery includes
display cabinets containing samples of Indian and Gulf banknotes and coins,
which were known to have been in circulation in Bahrain. They also contain
official documents issued by the CBB pertaining to the issue of Bahraini
banknotes and coins.
The first cabinet contains all the Indian and Gulf
banknotes and coins, which were in circulation between 1947 and 1965. The second
cabinet covers the establishment of the Bahrain Currency Board and also a copy
of the Amiri Decree announcing the issuance of the Bahraini Dinar. There are
also historical photographs of the exchange of the Gulf Rupee currency for the
new Bahraini Dinar at Eastern Bank Limited in 1965, a ceremony that marked the
end of the rupee and the introduction of the Bahraini Dinar.
The third
cabinet relates to the establishment of the Bahrain Monetary Agency in 1973. It
contains a copy of the Amiri Decree of 1973 relating to the formation of the
Bahrain Monetary Agency, a copy of the first Annual Report issued by the Agency
in 1974 in both Arabic and English, as well as some other official documents
issued by the Agency during its formative period.
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