What Is the Barbados Dollar (BBD)?
The BBD (Barbados dollar) is the national currency of the Caribbean island nation of Barbados. Users of the Barbados dollar sometimes use the symbol “Bds$” to differentiate it from other dollar-denominated currencies, such as those of the United States, Canada, and Australia.
Like the U.S. dollar (USD), the Barbados dollar subdivides into 100 cents. As of September 2020, the BBD remains pegged at USD $0.50.
- The Barbados dollar (BBD) is the national currency of the island of Barbados.
- The currency is pegged to the U.S. dollar at a rate of 2 BBD per USD.
- Today, tourism and offshore tax services are major drivers of the economy of Barbados.
Understanding the Barbados Dollar
Barbados is an island nation in the Lesser Antilles off the coast of South America. Both the Spanish and the Portuguese laid claim to the island during their periods of colonial expansion, but it was the British who would later establish a colony there in 1627.
In 1882, the first dollar-denominated currency was issued by private banks. Along with British pounds (GBP), these new banknotes formed the nation's legal tender. The last of these private banknotes were issued in 1949, after which time the role of distributing and maintaining the national currency was reserved by the government.
The current Barbados dollar began circulation in 1972, six years after its independence when it replaced the East Caribbean dollar (XCD) at a value of one-to-one. This occurred shortly after the establishment of the Central Bank of Barbados, which administers the currency today.
In 1975 the currency value was been pegged at a rate of 2 BBD per USD, where it has remained since. BBD is circulated in both coin and banknote formats, with the coins minted in denominations of 1 cents, 5 cents, 10 cents, 25 cents, and one dollar, and the banknotes printed in denominations of two, five, 10, 20, 50, and 100 dollars. U.S. dollars are often accepted in Barbados.
The Economy of Barbados
Sugar cane was introduced to Barbados when it became colonized in 1640 and was afterward a mainstay of the economy as a reliable cash crop. The labor-intensive cultivation caused a massive growth in the island's population, many of whom were enslaved plantation workers at that time. The island remained a British possession until its independence in 1966.
Since the 1970s, the economy of Barbados has been principally known for its tourism, manufacturing, and offshore financing sectors. Today, the service sector holds the largest share of national gross domestic product (GDP) by a wide margin, representing over 80% of the total.
Since joining the World Trade Organization (WTO) in Jan. 1995, offshore tax services have become a growing driver of Barbados' economy. In fact, by the late 1990s, this new sector had eclipsed sugar production, the traditional bedrock industry of the island.
Because it is pegged to the USD at a rate of two-to-one, the value of the Barbados dollar relative to the USD has been highly stable. Likewise, inflation has remained stable at around 5% per year for the past several decades, although more recently it has trended below 3% per year.
Since 2007, Barbados' real per-capita GDP, measured based on purchasing power parity (PPP), has grown at a compound annual growth rate (CAGR) of just under 1%. For the year 2019, the country's GDP shrank marginally at a rate of -0.10% , with an inflation rate of 4.1% .