DEFINITION of 'Christmas Island Dollar'
The former currency of Christmas Island, an Australian island in the Indian Ocean that was discovered on December 25, 1643. Today, the Christmas Island dollar is obsolete, with Christmas Island now using the Australian dollar. This switch from the use of a local currency to the use of another jurisdiction's currency is called dollarization and is a common phenomenon throughout the world. Dollarization can help a country obtain currency stability and encourage both domestic and foreign investment. The Australian dollar is one of the most frequently traded currencies in the foreign exchange market.
BREAKING DOWN 'Christmas Island Dollar'
In 2010, Christmas Island had an estimated population of less than 1,500 people. Most of the island is a national park. English is the official language, although the majority of the population is Chinese. The island's economy consists of tourism and a dwindling phosphate extraction industry. Other places that use the Australian dollar include the Pacific islands of Nauru, Tuvalu and Kiribati as well as Norfolk Island.