5 Pounds – Gibraltar

In 1998, the currency situation in Gibraltar was defined by its unique constitutional position and its deep economic ties to the United Kingdom. As a British Overseas Territory, Gibraltar issued its own currency, the Gibraltar pound (GIP), which was pegged at par with the British pound sterling (GBP). This local currency, featuring distinct Gibraltar designs, was legal tender only within the territory, while sterling notes and coins also circulated freely and were universally accepted. This system created a de facto dual-currency environment, with sterling functioning as the anchor of monetary stability.

The period was one of significant economic transition, as Gibraltar was actively diversifying away from its historical dependence on the UK Ministry of Defence. The growth of the offshore financial services and tourism sectors increased daily commercial interactions with visitors, particularly from neighbouring Spain. This made the practical currency situation fluid; while Gibraltar pounds were used domestically, Spanish pesetas (and soon the euro, introduced in 1999) were widely accepted in many retail and hospitality businesses to accommodate the large influx of day-visitors from across the border.

Underpinning this arrangement was a Currency Board Agreement established with the UK Treasury. This mandated that the Government of Gibraltar hold sterling reserves to fully cover the Gibraltar pound notes in circulation, ensuring absolute convertibility and confidence in the local currency. Therefore, in 1998, the system was stable and uncontroversial, designed to mirror UK monetary policy precisely while allowing for a symbol of local identity through its own banknotes, all within the broader context of Gibraltar's economic modernisation and European integration.