1 Cent – The Bahamas

In 1985, The Bahamas operated under a fixed exchange rate system, pegging the Bahamian dollar (BSD) at par to the United States dollar (USD). This one-to-one parity, established in 1966, was a cornerstone of the nation's financial policy, managed by The Central Bank of The Bahamas which was founded in 1974. The primary objectives of this regime were to ensure monetary stability, control inflation, and foster confidence in the financial sector—a critical consideration for a nation whose economy was heavily reliant on tourism and foreign investment, both predominantly sourced from the United States.

The period was characterized by relative stability in the currency market, but not without underlying economic pressures. The Bahamas, like many nations in the mid-1980s, was navigating the aftermath of global recessions. While the fixed rate provided predictability for businesses and protected the purchasing power of citizens, it also limited the Central Bank's ability to use monetary policy as a tool for domestic economic adjustment. The country maintained strict exchange controls for residents to prevent capital flight and defend the peg, requiring approval for foreign currency transactions and limiting investments abroad.

Overall, the currency situation in 1985 reflected a deliberate trade-off. The Bahamian government prioritized the stability and international credibility afforded by the USD peg, essential for its service-based economy, over the flexibility of a floating currency. This policy successfully anchored prices and facilitated seamless transactions for the crucial tourism industry, but it also meant the country's monetary conditions were effectively imported from the United States, tying The Bahamas' economic fortunes closely to the monetary policy decisions of the U.S. Federal Reserve.