The peso is the official currency of Colombia. It was originally introduced in 1837 as a replacement for the Spanish real. The early peso was divided into 8 reals, but the currency was decimalized in 1847 to be subdivided into 10 reals, and each real was divided into 10 decimos de reales. These subdivisions were converted into the current hundredth subunits, centavos, from 1860 to 1872. As part of the currency reform that took place in the late 19th century, the peso went on the gold standard by becoming pegged to the French franc at a rate of 1 Colombian peso: 5 French francs. However, in 1886, this peg was removed and rapid devaluation of the peso commenced with a great disparity between the value of banknotes and coins. It was not until 1907 when the disparity was fixed, but new coins had to be printed with “peso p/m” to denote that they were equal with peso banknotes. The peso banknotes, however, were converted to a new currency called the peso oro. The peso oro denomination for banknotes survived until 1993, long after the currency had been stabilized in 1931 by adopting a peg to the U.S. dollar at 1.05 pesos: 1 USD.
The sole monetary authority in Colombia is the Bank of the Republic, which was established as the Central Bank of Colombia in 1923. It was originally funded with 10 million in gold reserves, with 50 percent provided by the government and 50 percent provided by international banks and investors. The founding of the bank was prompted by a commission headed by Edwin Kemmerer of Princeton University, which was hired by several South American countries to modernize their economies. The Bank of the Republic was established with several primary duties: to issue legal tender, to act as a banker for the government and commercial banks and to lend money to the government and commercial banks when necessary. The 10-member board of directors consists of individuals from both public and private sectors.
Coins and banknotes were issued by the Bank of the Republic in several different series’ and denominations over the years. Today, coins are minted in denominations of 20, 50, 100, 200 and 500 pesos, although the 20-peso coin is rarely used. Banknote denominations begin at 1000 pesos with the 50,000-peso note being the highest denomination issued.