Samoa did not always
have a Central Bank. Before independence in 1962,
Samoa used the currency issued (British pounds,
shilling and pense) by the Bank of New Zealand,
which was owned by the New Zealand Government.
After independence,
currency was initially issued by the Bank of Western
Samoa. Like the Bank of New Zealand, this was a
commercial bank, but it was partially owned by the
Samoan Government, and carried out currency
operations and foreign exchange policy on behalf of
the Government.
In the early 1970's,
the Government decided that it needed to take more
formal control of the currency issue. However, at
that time the Government saw little need for a
central bank, believing that the other duties we now
take for granted could be handled in other ways. So
the issue of the new currency was put under the
control of the new organization, the Monetary Board
of Western Samoa. This was established by the
Monetary Board of Western Samoa Act of 1974, and
came into being early in 1975.
The
Act of Parliament that set up the Monetary
Board gave it four objectives:
(a)
to
control and regulate the supply of money in the
country;
(b)
to
promote and foster internal and external
monetary stability in Western Samoa;
(c)
to
promote sound banking and financial structure;
and
(d)
to
promote and foster credit and exchange
conditions that are conductive to orderly and
balanced economic growth.
As Samoa developed,
ideas also developed and changed. The Government
felt that it was time to begin issuing currency
directly. This needed an organization with a proper
balance sheet, to reflect not only the currency
liability, but also the assets that backed the
currency issued. This balance sheet could also then
be used to hold the reserves of the commercial
banks.
Also in the late 1970s
early 80s, the Samoa economy was in a critical
financial state. The inflation rate was close to 30
percent, interest rates were very high, foreign
exchange reserves were almost depleted and the
Government budgets were producing large deficits.
There was a need for a separate and more independent
institution to administer monetary policy functions.
So in 1984, the
Government passed the Central Bank of Samoa Act to
establish the Central Bank to do these things and to
take over the role of advising on, and implementing,
monetary policy.
Later, the Financial
Institutions Act 1996 added the licensing and
supervision of financial institutions to the
Central Bank's responsibilities. More recently
again, the Money Laundering Act 2000 has made the
Central Bank the Money Laundering Authority for
Samoa. The Bank also has some involvement with the
Offshore Finance Centre which is expected to become
an independent statutory corporation.
