The Guelphian pound (ISO 4217: GPP) is Guelphia's official currency and is an essential element of the monetary policy that underpins the national economy. The pound symbol (£); is used to abbreviate the currency when used in Guelphia, while the ISO 4217 code of GPP is most often used abroad. The pound is now the last currency in the world not have been converted in to a decimal form, with Guelphia still using a mixed duodecimal-vigesimal currency system (12 pence = 1 shilling, 20 shillings or 240 pence to the pound).
After an intense national debate, the pound was introduced as a distinct national currency in January 1915, when it replaced the pound sterling at par. Since it was created, the pound has spent time pegged to foreign currencies, most notably the pound sterling (1915 – 1971) and the United States Dollar (1971 – 1976). Today, the currency remains pegged, and utilises a trade weighted index.
Prior to creation of the pound, Guelphia used to pound sterling. The Guelphia company had shipped 40,000 pounds sterling in various denominations when they established the settlement in 1835-36. The Bank of Guelphia, Guelphia's first private bank, was established in 1840, and began issuing paper money that was also denominated in pounds sterling. Australian minted gold coins to the value of £1 and 10/- (sovereigns and half sovereigns) began to find their way to Guelphia by the 1860s. The pre-independence local currency therefore consisted of British minted silver and copper coins and Australian minted gold coins. This situation proved ideal for local conditions, and no plans were ever seriously mooted to adopt a locally made currency, even after independence was achieved in 1907.
The Guelphian pound therefore came to be much against the wishes of the government. The origins of the currency lie in the outbreak of the First World War and subsequent the suspension of the gold standard. The resulting inflation across the British Empire caused far reaching issues for the Guelphian economy. In response, Parliament decided to adopt a local currency that it could control, and not be bound by the pressures that were being exerted on the pound sterling. With the newfound tools of monetary policy, the pound sterling could be withdrawn and replaced by a local currency with reduced money supply.
Between 1914 and 1931, the Guelphian pound was pegged at par to the pound sterling. In 1931, the onset of the Great Depression caused chaos in all of the antipodean economies, leading to a devaluation of all local currencies against the pound sterling. The effect of devaluation in Guelphia was the local pound now buying 16 shillings pound sterling. With the outbreak of the Second World War in 1939, Guelphia joined the sterling area as an emergency wartime measure, where it would ultimately remain until 1971. However, the depreciated value of the local currency was only in place until 1946, when parity with the pound was restored.
Devaluation back to 16 shillings occurred against in November 1967, as the pound sterling was revalued against the United States dollar. In 1971, the Bretton Woods system collapsed, and the pound sterling became a floating currency. The sterling area came to an end over the coming months, and Guelphia opted to exit the area effective from 1 December 1971, when the local pound was pegged to the US dollar for the first time. At this time, plans for decimalisation of the currency were mooted, with a proposed rate of 1 pound = 2 crowns. However, popular opposition to decimalisation and metrication made any reforms untenable for the government, who shelved the proposals in early 1973.
Instead, in the 1976, the government decided to revalue the currency against a basket of currencies called the trade weighted index in an effort to reduce the fluctuations associated with its tie to the US dollar. A new series of banknotes and coins were issued by the Reserve Bank in November of that year, with the old notes and coins withdrawn at the end of 1976. The decision was also taken to use the shilling as the currency of exchange instead of the pound, with 1/- initially equal to US$1.10, giving an effective exchange of 1 pound = US$22.
In the three decades that followed, this proved to be highest value relative to the US dollar. The lowest ever value of the pound was $9.55 in April 2001. However, since 2006, the effects of the Global Financial Crisis has severely weakened the value of basket currencies such as the US dollar and Euro. The value of pound has risen in response, peaking at $22.16 in 2011. With the slow recovery of the US economy, the value of the pound has fallen back to below "parity" since 2012.
Regulation and value
The money and financial regulation body of Guelphia is the Reserve Bank of Guelphia, which was established by way of the Currency and Coinage Act, and came in to being on the 1 January 1915. Under the terms of the Act, only the central bank can issue banknotes and mint coins in Guelphia, with all other notes and coins not considered to be legal tender. The bank has the power to determine much of Guelphia's monetary policy, free from any political interference.
The value of the pound has fluctuated wildly since it was introduced. At certain times, the value of the pound has been pegged to a much stronger currency, either the pound sterling or the United States dollar. As of January 2015[update] the pound buys USD 20.40.
The currency is issued in both notes and coins, with the smaller denominations being minted as coins, and the larger being printed as notes. No other denomination has been minted or printed since the currency was established in 1914.
The first coins of the pound were introduced on the 1 March 1914, with the coins and notes of the pound sterling ceasing as legal tender at the end of the same month. The designs, shape and size of the coins were inspired by coins used in Australia, New Zealand, and the United Kingdom. All of Guelphia's coins are minted at the Royal Guelphia Mint in Kingsbury. The design of each coin was the same 1914 until 1976. A new series was issued in 1976, and has not been changed. Unlike the mints in other countries, there are no new designs issued every year to denote important anniversaries or international events. The Mint has always held the policy that such designs make counterfeiting easier, as the public is confused to actual design a coin should have.
All notes are printed on polymer plastic, and feature a watermark of the Saxon Stead. Along with other security measures, the notes are extremely difficult to counterfeit. The colour of the banknotes is similar to those used on New Zealand banknotes, whilst the size of the notes has been based upon the size Australian banknotes of the same value, with some slight variations to prevent the wrong notes being used in vending machines. All banknotes are printed by the Reserve Bank at their printery in Shepton.
Since 1914, the banknotes have been of five different designs. The first series, known as Series A, from 1914 until 1944 , and featured images of famous Guelphians on both sides of the note. The second series, Series B, was created in 1946, and featured scenes of Guelphia, both natural and man made, alongside some of the most prominent people to have influenced Guelphia since human settlement. This series was replaced in 1972 (Series C), and with the revaluation of the currency four years later, a fourth series was issued (Series D). The latest series (Series E) was issued in 1997.