Cook Islands dollar

History[edit]

Until 1967, the New Zealand pound was used in the Cook Islands, when it was replaced by the New Zealand dollar.


In 1972, local issues of coins of the New Zealand dollar began to be released for the Cook Islands.


In 1987, the Cook Islands dollar was established and pegged at par to the New Zealand dollar,^[1] with each Cook Islands dollar backed by a New Zealand dollar held by the Treasury of the Cook Islands government and freely interchangeable; the New Zealand dollar remained legal tender alongside the new currency.^[2]


The Currency Reserves Amendment Act 1989 modified the required backing of Cook Islands dollars to 50% of the face value for circulating currency, and 2% of the face value for currency not intended for circulation (proof, uncirculated, and souvenir coin sets; uncut note sheets).^[3]


By 1993, circulating $3 notes were only backed by 5% of their face value in NZD, and coins were not backed at all. Meanwhile, the rate of currency issuance, and governmental budget deficits, had increased such that the national debt was nearly double annual GDP. Eventually, commercial banks refused to convert the currency to New Zealand dollars resulting in capital flight and an economic crisis.^[1] This prompted the government to revert to using the New Zealand dollar as the country's currency in April 1995.^[4] Cook Islands dollar banknotes other than the $3 notes ceased to be legal tender,^[5] although they remained convertible to New Zealand dollars at the Cook Islands Treasury until 2005.^[6]


Coins have been struck on different occasions mainly by the Royal Australian Mint, the Franklin Mint and National Collecter's Mint in the United States, and the Perth Mint, with the paper currency being printed by De La Rue in England.