Posted by / Saturday 14 January 2017 / No comments

The historical development of money in Sierra Leone

Definition of money
Money can be defined as “any commodity which is generally acceptable in exchange for goods and services.” It has three dimensional meanings. The first is that it is a medium of exchange. The second is that it is a unit of account and the third is that it is a store of value. For the ordinary man in the street, because he uses money for the exchange of goods and services is seen as a medium of exchange.

In the beginning, goods were exchanged for other goods. This means that if someone wants oranges, he or she needed to exchange what he or she had for the orange. For instance, the person has avocado but wants oranges; so he looks for someone who has oranges and exchanges it. This system was called the barter system.

There were difficulties with the operation of this barter system. One of these problems is that if someone had avocados and wanted oranges, that person must look for another person who has the oranges he or she is looking for but who also wants avocado in return. Apart from that, there was a problem of determining how many avocados must be exchanged for how many oranges. The system was therefore not as smooth as was needed.

The next stage of the development of money is the stage of commodity. This kind of money was valuable and wanted by many people. It was also durable and portable. It could also be easily stored. An example of this commodity is maize because it was in great demand and was useful on its own. At other times, commodities like tobacco, salt etc were used as money.

After this, precious metals were introduced and used. They were referred to as metallic money. Some examples of precious metals which were used as money were gold and silver. For one thing, they were valuable. They could also be divisible into smaller sizes and weighed so as to assign a value to each or weight.

One of the earliest use of coins as money was in Ancient India around the 6th century BC. Later, the Greeks and the Romans used it.

Paper currency, on the other hand, was first introduced in China in the 11th century. Later, it was introduced in Europe by the renowned explorer, Marco Polo in the 13th century. The paper currency later spread to other parts of the world.

In 1912, the British formed the West African Currency Board and its main function was to control the supply of currency to the British West African colonies. Thus the board introduced the British West African pound in the various colonies including Sierra Leone.

The Leone was introduced in Sierra Leone on 4th August 1964 to replace the British West African pound. At the time of the introduction of the Leone, one British West African pound was equivalent to two Leones.  

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