Monday, May 18, 2015

Malaya currency ceases to be legal tender

Malaya old currencies issued by The Board of Commissioners of Currency Malaya and British Borneo ceases to be legal tender on 15 January 1969 and the next day only Malaysia 1st series coins and banknotes are allowed to be used as payment in Malaysia, Singapore and Brunei.

Malaya currency

The Board of Commissioners of Currency, Malaya and British Borneo was constituted under the 1950 Currency Agreement, with power to issue currency in the Federation of Malaya, Singapore, Sarawak, North Borneo and Brunei.

On 26 January 1959, Bank Negara Tanah Melayu was established and has been given the authority to issue Malaysia currency under Bank Negara Tanah Melayu Ordinance 1958.

According to Solid backing for money in Malaysia articel published by The Straits Times, 15 May 1971. Bank Negara Tanah Melayu Ordinance 1958, grants Bank Negara Malaysia (the Central Bank of Malaysia) the sole right of issuing currency in Malaysia. This power was held in abeyance for eight and a half years to enable the member countries of the Currency Board to investigate the possibilities of some form of common currency arrangement when the Board ceased to issue currency.

After the establishment of Malaysia in September 1963, which brought into a political federation all the participating countries of the Currency Board except Brunei, The Malaysian Government lodged with the Currency Board on December 12, 1964, and notice of its intention to replace the Board by Bank Negara as the sole currency issuing authority in Malaysia.

Under the provisions of the 1960 Currency Agreement, the lodgment of such a notice involved the relinquishment by the Currency Board of its authority to issue currency notes not later than December 1966, and coin twelve months later.

By mid-1965, preparations by Bank Negara to assume currency issuing powers had reached an advanced stage, but these arrangements had to be reviewed when Singapore was separated from Malaysia in August 1965. The authority of the Currency Board to continue issuing currency was subsequently extended for a further six months. When agreement could not be reached with Singapore on a common currency and with Brunei having opted for a currency of its own, the Malaysian Government decided that Bank Negara should proceed without further delay to issue currency for Malaysia alone.

It was indeed an historic landmark for Bank Negara when the currency issuing functions, which had been suspended since the Bank's establishment in 1959, were finally taken over by the Bank on June 12, 1967. The old Malayan currency was redeemed at par with the Malaysian dollar until the devaluation of sterling in November 1967, after which the rate was 1.18 Malayan Dollar to one Malaysian Dollar.

On 13 September 1968, the then Malaysian Minister of Finance, Tun Tan Siew Sin publish a statement via The Straits Times:
"On and after that date members of the public will not be legally obliged to accept these old notes and coins in payment for goods and services or in settlements of debts. Members of the public who are still in possesion of old currency notes and coins are advised to exchange them for new notes and coins in their own countries."

The Straits Times also reported that by August 1968, 94.38% of the old currency had been redeemed in Singapore, Malaysia and Brunei.

When the date 15 January nearly there, There are rumors that Shops in Penang plan to close shop on 15 and 16 January. There are also reports saying that some banks in Singapore don't accept the Malaya Currency one week before the dateline.

Government has announced that it is not an offence to accept the old Malaya currency and although the old currency is no longer legal tender starting from 16 January 1969, it still can be change at banks, post office (for town without bank) and currency exchange centre set up by state government in Perak & Kedah.