Hubbry Logo
Belize dollarBelize dollarMain
Open search
Belize dollar
Community hub
Belize dollar
logo
7 pages, 0 posts
0 subscribers
Be the first to start a discussion here.
Be the first to start a discussion here.
Belize dollar
Belize dollar
Belize dollar
View on Wikipedia
from Wikipedia
Belize dollar
Obverse of the 2003 banknote series
ISO 4217
CodeBZD (numeric: 084)
Subunit0.01
Unit
Symbol$‎
Denominations
Subunit
 1⁄100cent
Banknotes$2, $5, $10, $20, $50, $100
Coins1, 5, 10, 25, 50 cents, $1
Demographics
User(s) Belize
Issuance
Central bankBoard of Commissioners of Currency of British Honduras (1894-1976)
Belize Monetary Authority (1976-1981)
Central Bank of Belize (1981-)
 Websitewww.centralbank.org.bz
Valuation
Inflation3.1%
 SourceStatistical Institute of Belize, August 2024
 MethodConsumer price index
Pegged withUnited States dollar
Value2 BZD = 1 USD

The Belize dollar (also known as the Belizean dollar[1]), known until 1973 as the British Honduras dollar, is the official currency in Belize (currency code BZD). It is normally abbreviated with the dollar sign $, or alternatively BZ$ to distinguish it from other dollar-denominated currencies.

It is divided into 100 cents. The official value is pegged at BZ$2 = US$1.[2]

History

[edit]

In 1825, an imperial order-in-council was passed for the purpose of introducing the British sterling coinage into all the British colonies. This order-in-council made sterling coinage legal tender; it set the exchange rate between sterling and the Spanish dollar at $1 = 4s 4d. This exchange rate was supposed to be based on the value of the silver in the Spanish dollars as compared to the value of the gold in the British sovereigns. The realistic exchange rate would have been $4.80 = £1 (equivalent to $1 = 4s 2d), and so the unrealistic exchange rate that was contained in the 1825 order-in-council led to the initiative being largely a failure. Remedial legislation came about in 1838 with a new order-in-council, which did not apply to the British North American colonies due to minor rebellions in Upper and Lower Canada. The 1838 legislation introduced the correct rating of $1 = 4s 2d.

When the original order-in-council of 1825 was introduced in Jamaica, Bermuda, and British Honduras, the local authorities set aside the mistaken rating of $1 = 4s 4d, and they unofficially used the alternative rating of $1 = 4s. The Bahamas would later adopt this same approach. When the 1838 remedial legislation came into force, sterling was well established in these territories, the Spanish dollar had been barred from circulation, and the authorities had no desire to adopt the devaluation that would have been associated with the correct rating of $1 = 4s 2d. The British shilling, referred to locally as a 'Maccaroni', was equal to one quarter of a dollar, and the system was working very satisfactorily.

For a period in the middle of the nineteenth century British Honduras operated the British sterling monetary system just like Jamaica and Bermuda. In the wake of the international silver crisis of 1873 the silver peso of neighbouring Guatemala drove the British currency out of circulation. In an attempt to return British Honduras to the gold standard, and influenced by the fact that most imports were coming from New Orleans in the United States, a new currency was introduced into British Honduras based on the US dollar, bringing British Honduras into line with Canada.

1 cent 1889 British Honduras, Queen Victoria

At that time, the Canadian dollar was on the gold standard, and one Canadian dollar was equal to one American dollar. This is the point where the currency history of British Honduras diverges from that of the rest of the British West Indies. In 1885, 1 cent coins were issued, followed by higher denominations in 1894. This year also saw the first issue of banknotes by the government and a switch from the silver Guatemalan peso to the gold U.S. dollar as the base for the currency, with $4.866 = 1 pound. The rate of $4.866 as opposed to $4.80 is explained by the fact that when the US dollar was first created in 1792, it was based on the average weight of a selection of worn Spanish dollars. Hence, the US dollar was at a slight discount in relation to the Spanish dollar. Following the introduction of the US dollar gold standard to British Honduras, the 25 cent coins were referred to as shillings due to their closeness in value to shilling sterling.

When the United Kingdom abandoned the gold standard in 1931, the British Honduras dollar continued with its attachment to the US dollar and as such it did not become part of the sterling bloc. At the outbreak of the second world war, unlike in the case of Canada, Newfoundland, and Hong Kong, British Honduras did join the sterling area even though it maintained its fixed exchange rate with respect to the US dollar. The sterling bloc should not be confused with the sterling area. The former was a group of countries who pegged their local currencies to sterling when the United Kingdom abandoned the gold standard in 1931, whereas the latter was an exchange control arrangement introduced as an emergency measure at the outbreak of the second world war.

In 1949 the British pound was devalued from US$4.03 to US$2.80. Since the British Honduras dollar was pegged to the US dollar, this caused a sudden increase in the value of the British Honduran dollar relative to the pound. Protests ensued which led to a devaluation of the British Honduran dollar to a value of 70 U.S. cents (equal to 5 shillings sterling).

Following Harold Wilson's devaluation of sterling in November 1967, the British Honduran dollar again devalued in sympathy with the British pound to 60 US cents. In 1978, the link to the British pound of BZ$4 = £1 was abandoned and once again the Belize unit was pegged to the US dollar at a fixed rate of BZ$2 = US$1. The current rate with the US dollar reflects the devaluation of 50% in relation to the original parity with the US dollar in 1885, which last applied in 1949.

For a more general outline of currencies in the British Caribbean region, see Currencies of the British West Indies.

Coins

[edit]
The coins of Belize
Main article: Coins of the Belize dollar

In 1885, bronze 1 cent coins were introduced, followed by silver 5, 10, 25 and 50 cents in 1894. These coins were minted at the Royal Mint and their style was similar to that of other British colonial dollar fractional coinage used in Hong Kong and Canada. Cupronickel replaced silver in the 5 cents in 1907. This was itself replaced by nickel-brass in 1942.

In 1952, cupro-nickel replaced silver in the 25 cent coins, with the same happening for the 50 and 10 cents in 1954 and 1956, respectively. Following a reduction in size in 1954, the 1 cent coin switched to a scalloped shape in 1956. In 1976, aluminium 1 and 5 cent coins were introduced. A nickel-brass, decagonal 1 dollar coin was introduced in 1990.

Banknotes

[edit]

Exchange rate

[edit]
Current BZD exchange rates
From Google Finance: AUD CAD CHF CNY EUR GBP HKD JPY USD
From Yahoo! Finance: AUD CAD CHF CNY EUR GBP HKD JPY USD
From XE.com: AUD CAD CHF CNY EUR GBP HKD JPY USD
From OANDA: AUD CAD CHF CNY EUR GBP HKD JPY USD

See also

[edit]

References

[edit]
[edit]
Revisions and contributorsEdit on WikipediaRead on Wikipedia

Belize dollar

View on Grokipedia
from Grokipedia

The (symbol: BZ;[ISO4217](/page/ISO4217)code:BZD)istheofficialcurrencyof[Belize](/page/Belize),subdividedinto100centsandservingas[legaltender](/page/Legaltender)foralldomestictransactions.[](https://www.centralbank.org.bz/home/core−functions/currency)Ithasbeenpeggedtothe[UnitedStatesdollar](/page/UnitedStatesdollar)atafixed[exchangerate](/page/Exchangerate)ofBZ; [ISO 4217](/page/ISO_4217) code: BZD) is the official currency of [Belize](/page/Belize), subdivided into 100 cents and serving as [legal tender](/page/Legal_tender) for all domestic transactions.[](https://www.centralbank.org.bz/home/core-functions/currency) It has been pegged to the [United States dollar](/page/United_States_dollar) at a fixed [exchange rate](/page/Exchange_rate) of BZ2 = US$1 since 1976, a policy enshrined in the of Belize Act to ensure monetary stability amid Belize's open economy and reliance on and exports.
The currency traces its origins to the dollar introduced in the late 19th century under colonial rule, which was renamed the in 1973 ahead of and has been issued in notes and coins by the of Belize since its establishment in 1982.
This peg has contributed to low and economic predictability, though it limits independent , requiring the to maintain sufficient foreign reserves to defend the rate against external shocks.
In 2025, a redesigned series of banknotes was introduced to enhance security features while preserving the established denominations of $2, $5, $10, $20, $50, and $100.

History

Origins as British Honduras dollar

Prior to the formal establishment of the dollar, the colony's monetary system relied on a heterogeneous mix of foreign coins, including silver s from South and , American silver dollars, and English silver and bronze denominations, with no paper currency in circulation. This chaotic arrangement stemmed from the colony's trade dependencies and lack of a unified local standard, leading to inconsistencies in valuation and acceptance. The dollar was introduced through Ordinance No. 31 of , which established the currency on a basis effective from 14 October , dividing the dollar into 100 cents to standardize transactions and replace the prior system. Concurrently, the Board of Commissioners of Currency was created to issue and manage the new currency, backed by reserves and invested funds, operating until and ensuring . The dollar was initially issued at to the , reflecting alignment with the prevailing international while accommodating local economic ties to both British sterling and American trade. The first government-issued banknotes appeared in 1894 under the Government of , featuring denominations of $1, $2, $5, $10, $50, and $100, which served as the initial paper currency and were secured against the currency board's reserves. Coins complemented these notes, including silver denominations of 50¢, 25¢, 10¢, and 5¢, alongside nickel- 5¢ and 1¢ pieces, with the American dollar and British sovereign or half-sovereign remaining alongside the new local currency to facilitate ongoing regional commerce. This framework provided stability amid the colony's reliance on exports like and logwood, though it preserved some foreign coin circulation until gradual displacement.

Transition to independence era

In June 1973, the colony of was officially renamed , prompting the gradual rebranding of its currency from the British Honduras dollar to the , with the first new banknotes incorporating the updated name introduced in 1974. This symbolic shift aligned with growing , as had achieved internal in 1964 but retained British oversight on foreign affairs and defense. A pivotal monetary reform occurred in May 1976, when the Belize dollar was pegged to the US dollar at a fixed rate of BZ2=US2 = US1, severing ties to the depreciating British pound sterling and reflecting Belize's increasing economic orientation toward the and trade partners. Later that year, on 1 November 1976, the Monetary Authority Ordinance established the Monetary Authority of Belize, replacing the colonial-era Board of Commissioners of Currency (active since 1894) and granting the territory greater control over note issuance, exchange rates, and nascent tools. The Authority's initial notes retained designs featuring Queen Elizabeth II but introduced regulated buying and selling rates for commercial banks on 16 June 1977 to stabilize liquidity. These institutional changes facilitated Belize's path to full on 21 September 1981, enabling a smoother transition from colonial currency management without immediate disruptions to the fixed peg or circulation. In preparation, the Monetary Authority demonetized pre-1965 Government of notes on 1 January 1981, phasing out outdated colonial issues while preserving coins as ; this ensured continuity amid the sovereignty shift, with the Belize dollar serving as the unified national post-independence. The reforms underscored a deliberate move toward economic , though full central banking functions awaited the of Belize's creation in 1982.

Establishment of fixed peg to USD

In May 1976, the government of (now ) severed the Belize dollar's longstanding parity with the British pound sterling, which had been fixed at BZ$4 = £1 since the early under the system, and instead instituted a fixed peg to the at BZ$2 = US$1. This shift was driven by the territory's growing economic orientation toward the , including substantial trade dependencies, tourism inflows, and remittances, which rendered the sterling link increasingly untenable amid the pound's volatility following the end of the and multiple devaluations in the and early . The decision aligned with causal economic pressures: as a small, export-reliant economy with heavy dollar-denominated transactions, maintaining sterling parity exposed to imported and exchange without commensurate benefits from ties. The peg's establishment preceded the formal creation of the Monetary Authority of Belize on November 1, 1976, which assumed responsibility for note issuance and initial reserve management to back the new regime, supplanting the that had operated since with notes redeemable in sterling or . Backed by held primarily in dollars, the fixed rate was legislated to ensure convertibility and stability, with the government directing commercial banks to align their operations accordingly; this mechanism effectively imported discipline while allowing limited domestic liquidity adjustments. from the period supports the peg's rationale: post-1976, Belize avoided the currency crises afflicting other economies tied to depreciating sterling, achieving relative price stability as inflation moderated into the late . The transition formalized Belize's de facto dollar bloc alignment, reflecting first-principles recognition that for a commodity-exporting with minimal industrial base, a credible to a stable, high-credibility currency like the USD minimized speculative attacks and transaction costs compared to floating rates or regional alternatives. Official reserves were restructured to hold sufficient USD assets for 100% cover of base money, a practice inherited from the and codified under the new peg, ensuring redeemability and forestalling balance-of-payments pressures that had strained the prior . This framework persisted through in 1981 and the of Belize's inception in 1982, which inherited and reinforced the peg without alteration.

Issuance and Denominations

Role of Central Bank of Belize

The Central Bank of (CBB), established on January 1, 1982, under the Central Bank of Belize Act No. 15 of 1982, succeeded the Monetary Authority of Belize and assumed primary responsibility for the issuance and management of the national currency. The CBB holds the exclusive legal authority to issue both banknotes and coins denominated in Belize dollars, with only those produced by the bank recognized as throughout the country. In fulfilling this mandate, the CBB designs, prints, and distributes to ensure public confidence in its integrity, durability, and resistance to counterfeiting, incorporating advanced security features such as watermarks, security threads, and intricate printing techniques. The bank determines the denominations available for circulation, currently including banknotes in values of $2, $5, $10, $20, $50, and $100, while coordinating the production of coins through authorized mints to match economic demand and replace worn notes or coins. The CBB also oversees the periodic renewal of currency series to enhance security and usability, as demonstrated by the unveiling of a redesigned series on January 24, 2025, which was introduced into circulation starting August 4, 2025, while maintaining the validity of existing notes during the transition. This role extends to regulating the supply of in alignment with objectives, including the fixed peg to the at BZ2.00=US2.00 = US1.00, thereby stabilizing the Belize dollar's value and supporting broader financial system oversight.

Coins in circulation

The circulating coins of the Belize dollar are issued by the Central Bank of Belize in denominations of 1 cent, 5 cents, 10 cents, 25 cents, 50 cents, 1 dollar, and 2 dollars, all of which remain legal tender. The 1 cent coin, introduced in various forms since the post-independence era, features a wavy edge for distinction from the 5 cent piece and depicts national flora or fauna on the reverse, with the obverse showing the portrait of Queen Elizabeth II. The 5 cent coin, composed primarily of aluminum or copper-plated alloys in recent issues, displays the numerical value encircled by beading, inscribed with "BELIZE" above and the year below on the reverse. Higher cent denominations, including 10, 25, and 50 cents, are struck in cupro-nickel and bear similar obverse portraits of Queen Elizabeth II, with reverses illustrating Belizean such as the or , or cultural motifs. The 1 , also in cupro-nickel, entered circulation in the 1990s and features the or indigenous motifs on the reverse. The 2 dollar , introduced in 1998, is made of cupro-nickel and prominently displays Belize's on the obverse alongside the denomination, with the reverse highlighting historical or natural symbols; it serves both circulating and occasional commemorative purposes but remains in . No new coin series has been announced as of 2025, unlike the updated banknotes, maintaining continuity in elements tied to British colonial heritage and .

Banknotes and security features

The Central Bank of Belize issues polymer-based banknotes in denominations of BZ$2, BZ$5, BZ$10, BZ$20, BZ$50, and BZ$100, with the BZ$2 note serving primarily for low-value transactions and higher denominations facilitating larger payments. The series in circulation as of August 4, 2025, replaces the previous polymer notes introduced in 2005, incorporating redesigned portraits of national heroes such as and Philip Goldson in place of earlier depictions, alongside symbols of Belizean heritage like the Building and indigenous motifs. These banknotes employ multiple layered security features to deter counterfeiting, including a visible when held to light, which displays the denomination value in Belizean Kriol script beneath an image of the jabiru stork, the national bird; chemically treated genuine paper resists alteration during washing attempts. A windowed runs vertically through higher-denomination notes ($20, $50, $100), revealing the text "" repeated alongside the denomination numeral when viewed against transmitted light. The see-through feature, positioned near the watermark, aligns a unique geometric pattern for each denomination—such as interlocking elements forming the value numeral—only when the note is held to light from either side. Additional overt and covert elements enhance verification: under ultraviolet light, the obverse displays two fluorescent blocks containing the denomination numeral and silhouette, while the reverse shows a of the logo. Intaglio printing provides raised tactile printing on key elements like portraits and value numerals, aiding blind recognition and touch-based authentication. The 2025 series introduces advanced machine-readable features, including holographic dynamic color-shifting stripes with Belizean imagery and applied metallic foils that shift hue under tilt, alongside novel serial numbering with repeating patterns for quick visual checks. These measures build on prior iterations, with the substrate itself contributing durability and resistance to wear, ensuring notes remain in circulation longer than paper predecessors.

Exchange Rate and Monetary Policy

Fixed exchange rate mechanism

The Belize dollar is pegged to the United States dollar at a fixed rate of BZ2.00=US2.00 = US1.00, a regime established in May 1976 and enshrined in legislation through the Central Bank of Belize Act, effective January 1, 1982. This mechanism anchors inflation expectations, promotes macroeconomic stability, and provides a predictable environment for investment in Belize's small, open economy, where domestic credit expansion often drives import demand and reserve pressures. To sustain the peg, the Central Bank of Belize maintains external assets equivalent to at least 40 percent of its domestic liabilities, ensuring adequate foreign reserves to intervene against deviations. Credit growth is regulated to balance domestic savings and investment, preventing excessive monetary expansion that could erode reserve adequacy or fuel inflationary imports. The primary tool for adjusting the involves varying reserve requirements on commercial banks, which modulates overall , influences lending rates, and controls expansion. Exchange controls, governed by the Exchange Control Regulations Act of 2003, further reinforce the peg by regulating foreign currency flows. The must approve capital transactions—such as non-resident investments, share transfers, and sales—as well as dealings and other foreign exchange operations, while current account payments require licensed foreign exchange permits. These measures monitor and limit potential imbalances in the balance of payments, including deficits and servicing, thereby safeguarding reserve levels and the fixed rate's integrity. This integrated approach has preserved the peg's stability for nearly five decades, underpinned by a national consensus valuing the resulting low and economic predictability over alternative floating regimes.

Economic implications of the peg

The fixed peg of the Belize dollar to the dollar at BZ$2.00 per US$1.00, established in May 1976, has anchored inflation expectations and contributed to macroeconomic stability in a small, open, import-dependent . By importing the credibility of monetary policy, the peg has shielded Belize from exchange rate volatility, fostering a predictable environment that supports , , and foreign . This stability has been particularly beneficial given Belize's reliance on imports for essentials, as the fixed rate minimizes currency fluctuations that could exacerbate imported . The of Belize maintains the peg through reserve requirements and credit controls, ensuring external assets cover at least 40% of domestic liabilities to defend against reserve drains from excessive domestic credit expansion, which often fuels import demand. However, the peg constrains monetary policy independence, forcing Belize to align interest rates and liquidity measures with US Federal Reserve actions, limiting the ability to respond flexibly to domestic shocks such as or tourism downturns. Without the option for , Belize cannot easily adjust competitiveness during balance-of-payments deficits, relying instead on fiscal restraint and reserve interventions, which can strain public finances and lead to parallel foreign exchange markets when official supply tightens. For instance, persistent deficits, as seen in the early 2000s when the current account gap reached -16.3% of GDP, have pressured reserves and elevated transaction costs for importers, with parallel market premiums exceeding 1% in fees. Empirical evidence from IMF analyses indicates that while pegged regimes like Belize's correlate with lower compared to floating rates, they heighten vulnerability to external factors, including US hikes that could trigger capital outflows absent sufficient reserves. During the , the peg amplified challenges by reducing foreign currency inflows from tourism and remittances, necessitating interventions to stabilize without altering the , which highlighted the regime's dependence on reserve buffers amid fiscal expansions that boosted imports. Despite these drawbacks, the peg has preserved some revenue—averaging $3.2 million annually in the late —unlike full dollarization, while providing a nominal anchor that has kept subdued relative to regional peers with more flexible regimes. Overall, the arrangement trades policy autonomy for , proving resilient over decades but requiring vigilant reserve management to mitigate risks from Belize's high exposure to climate events and contingent liabilities.

Maintenance and reserve requirements

The Central Bank of Belize (CBB) maintains the Belize dollar's fixed peg to the at BZ$2.00 per through statutory reserve requirements and active interventions. Under Section 25(2) of the Central Bank of Belize Act, the CBB must hold approved foreign assets—primarily and other highly liquid reserves—equivalent to at least 40 percent of the total notes and coins issued and in circulation. This minimum backing provides a foundational layer of external , enabling the bank to absorb shocks to demand for without immediate risks. In addition to the statutory minimum, the CBB targets broader reserve adequacy to ensure the peg's long-term credibility, often exceeding the 40 percent threshold amid economic pressures. totaled US$482.10 million as of 2024, up from US$473.30 million in 2023, reflecting efforts to rebuild buffers post-COVID-19 drawdowns when inflows declined and interventions were needed to stabilize the . The bank intervenes in the by buying or selling US dollars to manage and prevent deviations from the peg, while also using tools like reserve requirements on commercial banks (historically the primary instrument) to control domestic credit expansion that could strain reserves. These measures prioritize external asset accumulation over interest rate adjustments, given the peg's constraints on independent . International assessments, such as those from the , emphasize the need for ongoing fiscal consolidation and structural reforms to bolster reserves further, as higher levels enhance peg sustainability amid vulnerabilities like dependency and . For instance, the IMF's 2025 Article IV consultation noted that accumulating reserves beyond current levels would mitigate risks from balance-of-payments pressures, with projections for moderate growth in reserves supporting projected of around 2.3 percent through 2027. During the , fixed reserve commitments amplified challenges, as reduced foreign inflows necessitated CBB sales of reserves to defend the peg, highlighting the trade-offs of rigid backing requirements in small, open economies. Despite these strains, the CBB has consistently upheld the peg since 1976 by aligning domestic liabilities with external asset coverage, avoiding outright reserve depletion.

Recent Developments

Introduction of 2025 banknote series

The Central Bank of Belize unveiled the redesigned 2025 series on January 23, 2025, marking a significant update to the nation's to incorporate modern enhancements and refreshed thematic elements reflective of heritage. This series replaces the prior designs, which dated back to earlier issuances featuring British monarchical portraits, with new imagery emphasizing national symbols, landscapes, and figures central to 's history and culture. The redesign, produced by , a specialist in secure printing, aims to deter counterfeiting through advanced features such as holographic elements, intaglio printing, and embedded threads, while maintaining the standard denominations of $2, $5, $10, $20, $50, and $100. Circulation of the new notes commenced on , 2025, with initial distribution via automated teller machines and commercial banks across the country, ensuring a gradual transition without invalidating existing banknotes. emphasized that the update aligns with ongoing efforts to safeguard monetary integrity amid evolving threats from sophisticated forgery techniques, while fostering greater public familiarity with Belize's evolving national identity post-independence. Old series notes remain indefinitely, allowing for coexistence to minimize disruption to commerce and everyday transactions. This introduction reflects broader monetary policy priorities of stability and resilience, particularly given the Belize dollar's fixed peg to the , where robust domestic features help reinforce trust in the local issuance despite widespread USD acceptance in informal sectors.

Changes in and symbolism

The 2025 series of Belize dollar banknotes marked a pivotal shift in by replacing the portrait of Queen Elizabeth II, a holdover from British colonial influence, with images of the nation's two recipients of the Order of National Hero: and Philip Stanley Wilberforce Goldson. This change, unveiled by the Central Bank of Belize in January 2025, symbolizes Belize's assertion of sovereignty following in 1981, prioritizing local icons of political leadership and nationalism over monarchical representation. George Cadle Price, revered as the for spearheading the independence movement and serving as the first , is depicted on the $5, $20, and $100 denominations. Philip Goldson, a , activist, and co-founder of early who advocated for , appears on the $2, $10, and $50 notes. These portraits underscore themes of and historical agency, drawing from Belize's political evolution away from status. Beyond portraits, the redesign integrates vibrant, modernized motifs celebrating Belize's multicultural heritage, including references to , Creole and influences, and natural landmarks like the barrier reef, intended to evoke national pride and cultural continuity. The updated color schemes and compositional layouts enhance visual distinctiveness while embedding symbolism of unity across ethnic groups, aligning with the Central Bank's aim to reflect contemporary Belizean identity in everyday currency.

Controversies and Debates

Arguments for de-pegging

De-pegging the Belize dollar from the US dollar at the fixed rate of BZ$2:1 USD, established in , would restore monetary policy autonomy to the of Belize, enabling independent adjustments to interest rates tailored to domestic inflation, growth, and employment needs rather than mirroring US policies. This flexibility is constrained under the current peg, as Belize's small, must maintain sufficient foreign reserves—covering about four months of imports as of 2023—to defend the rate, limiting tools for addressing asymmetric shocks like hurricanes or commodity price volatility in agriculture exports such as and bananas. Advocates contend that allowing currency depreciation could enhance export competitiveness and narrow Belize's chronic current account deficits, which averaged 10-15% of GDP in recent years, by making non-USD denominated goods cheaper abroad without relying on painful internal adjustments like wage cuts or fiscal . For instance, during the , the peg exacerbated challenges by requiring interventions to stabilize reserves amid a 20-30% drop in revenues—Belize's key foreign exchange earner—without the option to devalue for quicker recovery in local-cost sectors. Such adjustments could also mitigate real effective misalignments arising from productivity gaps relative to trading partners. Critics of the peg, including some local analysts, argue it fosters over-reliance on dollar inflows from and remittances, which comprised over 40% of GDP in 2022, while eroding and exposing Belize to policy spillovers, such as interest rate hikes that raised domestic borrowing costs without corresponding benefits. However, these arguments acknowledge risks like imported volatility, emphasizing that de-pegging should pair with strengthened fiscal discipline to avoid speculative attacks, as seen in historical peg breakdowns elsewhere.

Risks of dollarization

Dollarization, the unilateral adoption of the as Belize's sole , would entail the forfeiture of revenues currently generated by the Central Bank of Belize through issuance of the Belize dollar. Estimates indicate an annual seigniorage loss of approximately $3.2 million, compounded by an initial conversion cost of around $100.4 million, including $97.2 million for exchanging existing currency holdings and minor expenses for note replacement. A primary economic risk involves the complete surrender of independent monetary policy, rendering Belize unable to employ adjustments or changes to counter domestic shocks, such as fluctuations in or agricultural exports, which constitute significant GDP shares. This misalignment with U.S. policies—tailored to a far larger, diversified —could amplify Belize's vulnerability to imported monetary tightening or easing, potentially exacerbating recessions or inflationary pressures without recourse to tailored stabilization tools. The Central Bank's capacity to act as would be severely curtailed, limiting provision during banking crises to holdings of foreign assets or external credit lines, which may prove insufficient for a small prone to external shocks like hurricanes or global commodity price swings. Dollarization fails to address underlying shortages, as it does not generate new reserves but instead heightens reliance on U.S. economic conditions, potentially increasing risk through elevated external borrowing needs and higher debt-servicing costs. Furthermore, the policy would impose symbolic and costs, viewed by some as diminishing Belize's over its monetary symbols, while offering no guaranteed resolution to structural challenges like account deficits or limited fiscal flexibility. In a context of Belize's fixed peg since , full dollarization represents an irreversible step that could entrench these vulnerabilities without the residual flexibility afforded by maintaining a national currency unit.

Counterfeiting challenges and USD acceptance issues

The of Belize has periodically issued fraud alerts regarding Belize dollar notes, such as the April 2020 warning about circulating fakes lacking proper security features like watermarks and security threads, urging the public to verify authenticity and report incidents to police. Instances of $100 bills have been reported by local businesses, prompting vigilance among vendors to check for tactile and visual indicators like raised ink and holographic elements. To address ongoing counterfeiting risks, the introduced a redesigned series in January 2025, incorporating advanced features such as substrates, , and iridescent strips to deter replication and enhance public confidence in the currency. Counterfeit U.S. dollars, which circulate widely due to the Belize dollar's fixed 2:1 peg to the USD, have exacerbated acceptance challenges, with an uptick in fakes reported in May 2025 leading multiple Belizean businesses—particularly in areas—to suspend USD transactions entirely to avoid losses. This reluctance stems from the difficulty in distinguishing genuine USD from counterfeits without specialized equipment, compounded by the peg's encouragement of dual-currency use, where businesses bear the risk of invalid notes while providing change in Belize dollars. Further complicating USD acceptance, many establishments refuse small-denomination bills like $1 USD notes, citing high counterfeiting prevalence and poor condition (e.g., tears or marks), with local banks increasingly declining to exchange them as of early 2025. Smaller vendors often insist on for transactions to mitigate these risks, though USD remains prevalent in larger operations at the official rate, highlighting a tension between economic reliance on dollar inflows and practical verification burdens.

References

  1. https://www.centralbank.org.bz/detail-pages/news/2024/09/26/new-family-of-currency-notes
  2. https://www.centralbank.org.bz/home/core-functions/currency/currency-notes/2005-issue/frequently-asked-questions---new-currency
  3. https://www.centralbank.org.bz/history-of-belize-currency
  4. https://www.centralbank.org.bz/home/core-functions/currency
  5. https://www.centralbank.org.bz/home/usd20250905-5
  6. https://www.centralbank.org.bz/detail-pages/news/2025/07/08/new-banknotes-to-enter-circulation-on-4-august-2025
  7. https://sites.krieger.jhu.edu/iae/files/2017/04/British-Honduras-Currency-Board.pdf
  8. https://www.centralbank.org.bz/home/core-functions/currency/demonetized-historical-currency/government-of-british-honduras-notes
  9. https://remaxbelizerealestate.com/belize-banking/currency-used-in-belize-for-belize-real-estate/
  10. https://www.centralbank.org.bz/home/core-functions/monetary-policy
  11. https://www.centralbank.org.bz/home/core-functions/currency/currency-notes/monetary-authority-of-belize-issues
  12. https://www.imf.org/external/pubs/ft/scr/2004/cr04101.pdf
  13. https://www.state.gov/reports/2024-investment-climate-statements/belize
  14. https://www.centralbank.org.bz/the-bank%27s-history
  15. https://www.centralbank.org.bz/home/core-functions/currency/currency-notes
  16. https://www.centralbank.org.bz/docs/default-source/7.0-news-advisories/pressrelease_currencylaunch2.pdf?sfvrsn=f080d14_3
  17. https://www.centralbank.org.bz/home/core-functions
  18. https://www.centralbank.org.bz/home/core-functions/currency/coins
  19. https://www.manorfx.com/blog/belize-currency-what-to-know-before-you-go/
  20. https://en.ucoin.net/coin/belize-1-dollar-1990-2022/?tid=42180
  21. https://www.centralbank.org.bz/home/core-functions/currency/security-features/watermark
  22. https://www.centralbank.org.bz/home/core-functions/currency/security-features/windowed-security-thread
  23. https://www.centralbank.org.bz/home/core-functions/currency/security-features/see-through-feature
  24. https://www.centralbank.org.bz/home/core-functions/currency/security-features/uv-features
  25. https://www.centralbank.org.bz/home/core-functions/currency/security-features
  26. https://www.greaterbelize.com/innovative-security-features-embedded-in-new-currency-notes/
  27. https://www.centralbank.org.bz/home/core-functions/exchange-control
  28. https://www.centralbank.org.bz/docs/default-source/4.7-educational-materials/foreign-exchange-controls--what-it-means-to-you-.pdf?sfvrsn=cfad644e_0
  29. https://www.centralbank.org.bz/docs/default-source/4.5-conferences-and-working-papers/implications-of-dollarization-for-belize.pdf?sfvrsn=eb4f4cec_0
  30. https://jobr.ub.edu.bz/index.php/ubrj/article/download/5/5/25
  31. https://www.centralbank.org.bz/docs/default-source/4.5-conferences-and-working-papers/foreign-exchange-reserve-cover-and-statutory-limits-central-bank.pdf?sfvrsn=e37df3c6_0
  32. https://tradingeconomics.com/belize/foreign-exchange-reserves
  33. https://www.centralbank.org.bz/detail-pages/publication/the-monetary-policy-transmission-mechanism-in-belize---a-bayesian-var-approach
  34. https://www.elibrary.imf.org/view/journals/002/2025/262/002.2025.issue-262-en.pdf
  35. https://www.spglobal.com/ratings/en/regulatory/article/-/view/type/HTML/id/3234703
  36. https://www.delarue.com/about/news/central-bank-of-belize-new-design-reveal
  37. https://noteshobby.com/blogs/banknote/belize-banknotes-a-journey-through-history-and-the-2025
  38. https://banknotenews.com/?p=45959
  39. https://www.theguardian.com/world/2025/jan/24/belize-queen-elizabeth-dollar-bills
  40. https://amandala.com.bz/news/national-heroes-featured-on-new-currency-notes/
  41. https://belizehub.com/belizes-new-currency-notes-what-you-need-to-know/
  42. https://www.nationalperspectivebz.com/economy/2025-04-22/belizes-21-peg-us-dollar-what-it-means
  43. https://www.nationalperspectivebz.com/finance/2023-04-01/pros-and-cons-belize-de-pegging-us-dollar
  44. https://www.centralbank.org.bz/detail-pages/publication/estimating-the-real-effective-exchange-rate-%28reer%29-for-belize
  45. https://www.imf.org/en/Publications/CR/Issues/2025/09/15/Belize-2025-Article-IV-Consultation-Press-Release-Staff-Report-and-Statement-by-the-570371
  46. https://www.investopedia.com/terms/p/pegging.asp
  47. https://www.spglobal.com/ratings/en/regulatory/article/-/view/sourceId/13223827
  48. https://www.centralbank.org.bz/home/core-functions/currency/counterfeit-currency
  49. https://www.sanpedrosun.com/business-and-economy/2020/04/03/fraud-alert-counterfeit-belize-currency-notes/
  50. https://www.facebook.com/hotoffthepressbz/posts/small-business-owner-warns-others-about-counterfeit-100-bills-after-falling-vict/3175869209399534/
  51. https://caribbeantoday.com/sections/business-blog/belize-unveils-new-designs-for-local-currency
  52. https://www.facebook.com/hotoffthepressbz/posts/an-uptick-in-counterfeit-us-currency-is-prompting-several-belizean-businesses-to/1148570290618755/
  53. https://blog.remitly.com/currencies/belize-dollar/
  54. https://www.reddit.com/r/Belize/comments/1hx652y/psa_re_usd_that_i_havent_seen_mentioned_here/
  55. https://www.reddit.com/r/Belize/comments/1j8469x/bzd_vs_usd/
  56. https://www.anywhere.com/belize/travel-guide/money
  57. https://travel.gc.ca/destinations/belize
Add your contribution
Related Hubs
User Avatar
No comments yet.