The dollar is the official currency of the Cayman Islands, a British Territory located in the Caribbean Sea, just south of Cuba. The dollar was first issued in 1972 after the establishment of the Cayman Islands Currency Board as the issuing authority. Although the Cayman Islands dollar is officially pegged to the U.S. dollar at a rate of 1 KYD: 1.227 USD, many local currency exchanges round it to 1 KYD: 1.20 USD. Today, the currency is issued by the Cayman Islands Monetary Authority.
Before the Cayman Islands Dollar was adopted as the official currency of the island, the Jamaican dollar was used. However, the United Kingdom officially granted the Cayman Islands the right to issue their own currency in 1970. A currency board was created to carry out the task of developing and issuing the first coins and banknotes, which began circulating in June 1972. The currency is backed through a pound sterling reserve account held at the Crown Agents in London.
In 1974, the original currency law was replaced with an updated version that set the Cayman Islands dollar on a peg to the U.S. dollar at the rate that continues today. The currency law was updated again in 1997, establishing the Cayman Islands Monetary Authority as the sole issuing organization, replacing the currency board. The Cayman Islands Monetary Authority is responsible not only for issuing and for redeeming currency, but also for regulating all financial services on the islands and advising the government on monetary policy.
Banknotes for Cayman Islands dollars are printed by De La Rue Printing, the official banknote printer for the U.K. Current denominations are 1, 5, 10, 25, 50 and 100 dollars. Coins are minted by the British Royal Mint in denominations of 1, 5, 10 and 25 cents.
The primary industries in the Cayman Islands are tourism and finance. Nearly 70 percent of the territory’s GDP comes from over 2 million tourists that visit the territory’s three islands each year. The Cayman Islands is also used as a major international offshore banking hub because it is not directly taxed by the United Kingdom. Over 40,000 financial services companies are registered to operate in the Cayman Islands, including banks, insurance companies, mutual funds and trust management firms. Government revenue comes from import duties and nominal licensing fees charged to financial institutions operating on the island.