The birr is the official currency of Ethiopia. It has a hundredth subunit called the santim. Before 1976, the birr was referred to as a dollar in English, but today, it is called a birr in any language. The birr is the second most-used currency on the continent of Africa, the first being the Nigerian naira. As of 2008, 13.84 billion AUD worth of birr were circulating, and the currency was used by more than 88 million people. The birr is issued by the National Bank of Ethiopia.
Before the introduction of the birr in 1893, Ethiopia, then referred to as Abyssinia, used a combination of salt blocks and Maria Theresa thalers for currency. Maria Theresa thalers, a globally traded silver bullion coin minted in London, became the official currency in 1855. However, the Indian rupee and the Mexican dollar were also frequently used. The birr was then adopted in 1893, with the first birr coins being minted by the Paris Mint. The original birr was also called a talari, and it was divided into 20 ghersh. Each ghersh could then be subdivided into 2 bessa. In 1903, a new silver birr was introduced, but it was only equal to 16 ghersh or 32 bessa.
In 1905, the banking group that established the National Bank of Egypt set up the Bank of Abyssinia to support the new birr, but the currency was slow to take off so additional Maria Theresa thalers had to be imported. In 1915, the Bank of Abyssinia issued birr banknotes, but their circulation did not become significant until after 1925. At the beginning of World War II, Ethiopia was occupied by the Italians, and the Italian lira was the official currency of Ethiopia from 1936 to 1941. When the British arrived to oust Italy from East Africa in 1941, they brought with them East African Shillings, which became the official currency until the second birr was introduced in 1945 at a rate of 1 birr to 2 shillings. The second birr was introduced as a decimalised currency instead of using the old system of ghersh and bessa.
The National Bank of Ethiopia was established in 1963 to carry out both central banking duties and commercial banking. The bank adopted a socialist economic principle in 1976 until it was reorganized in 1994. The new economic policy of the bank is market-based and allows for balanced growth of the Ethiopian economy.