1 Pound – Falkland Islands

The currency situation in the Falkland Islands in 2020 remained stable and unchanged in its fundamental structure, continuing its long-standing dual-currency system. The official currency is the Falkland Islands pound (FKP), which is pegged at parity with the British pound sterling (GBP). Both currencies circulate interchangeably and are accepted for all transactions on the islands, with the local government issuing its own banknotes and coins. This peg provides crucial economic stability, anchoring the territory's financial system to that of the United Kingdom.

Economically, 2020 was a year defined by the global COVID-19 pandemic, which significantly impacted the islands' key sectors, particularly tourism and fisheries. Despite this external shock, the fixed exchange rate regime provided a buffer against currency volatility. There were no devaluations or major monetary policy shifts, as the Falkland Islands Government does not have an independent central bank. Monetary policy is effectively set by the Bank of England, and the local Currency Commissioners ensure the full backing of the issued FKP with sterling reserves.

Consequently, the main currency-related discussions in 2020 were practical rather than systemic, focusing on the increased use of digital and card payments due to hygiene concerns during the pandemic. The traditional reliance on cash, especially in more remote areas, began a gradual shift. The underlying commitment to the sterling peg remained absolute, as it is seen as essential for maintaining confidence, controlling inflation, and facilitating trade—most of which is conducted with the United Kingdom and other sterling area nations.