5 Sovereigns (Regal Coinage) – Gibraltar

In 1989, Gibraltar's currency situation was a unique and practical hybrid, reflecting its status as a British Overseas Territory with deep economic ties to neighbouring Spain. The official legal tender was the Gibraltar pound (GIP), issued by the Government of Gibraltar and pegged at par with the British pound sterling (GBP). Sterling notes and coins also circulated freely and were accepted interchangeably with local currency, underscoring Gibraltar's constitutional link to the United Kingdom.

However, the day-to-day reality was one of effective de facto dual circulation. Due to the volume of cross-border workers and tourists from Spain, the Spanish peseta was also widely accepted, especially in retail, hospitality, and services. This pragmatic acceptance facilitated commerce but introduced complexity, with exchange rates fluctuating and businesses needing to manage two cash flows. The border with Spain, fully reopened in 1985 after years of restriction, had significantly increased this economic interaction.

The period was one of stability for the Gibraltar pound itself, but it occurred within a broader context of monetary debate. As a member of the European Economic Community (EEC) alongside the UK, Gibraltar was part of the European Monetary System but not in the Exchange Rate Mechanism. Discussions about European monetary integration were advancing, yet Gibraltar's fundamental currency question remained balancing its sterling-based system with the practical necessities of its geographic and economic position on the Iberian Peninsula.