Currency is an asset or a product that allows and facilitates the exchange of other goods and services. Previously different merchandise was used as long as they were accepted as a means of exchange in the transfer of goods. Among the articles used were pelts, metal, animals, wheat, barley and tools.
In Babylon the use of metals in the form of bars or ingots were used for monetary means. Later, different pieces with different shapes made from alloys of gold and silver were used; leading up to the minting of drachmas in Greece, coins that included figures on their faces but had the inconvenience of being too heavy. In Rome they recurred to silver as the basic or central component of the pieces, in the denarius, as they were called. With these coins the concept of “legal course”, in other words, coins to which authorities had conferred the characteristic and authority to be accepted in any area of their jurisdiction as currency, was begun. From there the monetary economy expanded to other countries.
The continued use of coins favored the appearance of entities specialized in today’s equivalent of mints and banks. In the measure in which the determination of the value of money increased, it transferred to paper representatives or fiduciaries, which were considered “convertible” or reimbursable for metals.
In Guatemala, the Mayas used Quetzal feathers, salt, obsidian, precious stones, jade and especially cacao beans for currency. The conquest and its consolidation demanded a monetary system in order to avoid going back to trading; therefore a structure based on Spanish currency was adopted.
The insufficiency in the availability of these coins demanded that different coins be made in the different countries of the Americas. In ours, the Spanish coins, imported as well as minted in the currency mints of our continent (mainly Mexico, Bolivia and Peru) continued circulating until the first decades of the XIX century.
Later, coins from the Republic of Central America or Federation of Central American States were minted. When the national state emerged and having founded the Republic of Guatemala during the government of Rafael Carrera, the “peso” was created as currency. This system included silver and gold pieces.
In the last 30 years of the XIX century the introduction of the decimal system was shared with the employment of other monetary structures based on the binary system. In this term “paper currency” was issued on behalf of the old banks of the system, and toward the end of the century, the peso as currency was no longer minted, keeping the lower denominations.
At the end of this same century a curious type of coin known as “cedulas” appeared, which were very small bills issued by the municipalities and commercial establishments for the payment of their obligations. The private monetary issue was also regulated; these were called “fichas”, minted previously for use in fincas (plantations), hotels and commercial businesses, etcetera.
During the government of Manuel Estrada Cabrera, the Banking Committee was created, authorizing the issue of paper currency with a guarantee of the values of the banks, and those of income from tobacco, chicha (contraband liquor) and aguardiente (spirituous liquor) as well as real estate belonging to the State. Also, in June of 1900 the authorization of the fractioned monetary issue in nickel (of one, half and a fourth of a real).
In November, 1924 and February 1925 the “Monetary and Conversion Law” and the “Law of Credit Institutions” were issued. Two alternatives were considered in order to maintain coins made of gold or that could be exchanged for gold (convertible): one, the hiring of an external loan; and the other, accumulation of national resources. It was decided that it would be made with national resources. The Monetary Law adopted the gold pattern and created a new monetary unit, the Quetzal, equal to the United States Dollar. The creation of a new national monetary symbol gave way to the founding of the Central Bank of Guatemala, which counted on the authority of being the only monetary issuer, after this important function had been entrusted to various private banks. The importance of this reform was based on having transformed an inconvertible system of paper money into one of great exchange stability.
Based on the exchange rate of the dollar in previous years, it was determined that the Quetzal would be equivalent to 60 pesos. The monetary issue was reserved exclusively for the State. Under this new regimen, the silver and copper coins had the function of fractioned money (the larger denominations were reserved for paper currency). In 1925 the coins of 1 Quetzal, ½ Quetzal, ¼ of a Quetzal, ten centavos and five centavos were minted in silver, as well as the one centavo coins with a copper alloy. In 1926, the 20, 10 and 5 Quetzal coins were issued, minted in a gold base. In 1932 two new denominations were introduced, of ½ centavo and 2 centavos whose alloys were copper and zinc.
The Second Reform of the monetary and banking system of the republic was the result of the revolution of October 1944, of the democratizing phase which followed and of the prevailing economic thought at the time. It came from the concept that the theory of the classic gold pattern or its new presentations, with the subordination of the internal economic stability to the external parity of the coin, could not be applied correctly in Guatemala. Its purpose then consisted of giving the country the organs to insure the maintenance of the internal economic stability and easing the progressive and orderly development of the production. For that effect, the Congress of the Republic in the last months of 1945 issued Decree 203, Monetary Law; and Decree 215, Organic Law of the Banco de Guatemala, which served as legal sustenance for the beginnings of a modern Central Banking system.
Prior to the establishment and initiation of activities of the new bank, the government of the Republic and the Central Bank of Guatemala subscribed, on June 15, 1946, an ad referendum agreement through which the latter would waiver its rights regarding the issuance of bills and coin minting. As of this, the right to issue would be exercised only by the State through the Banco de Guatemala, which should at the same time assume the liable corresponding to bills in circulation and of the deposits constituted in the Central Bank of Guatemala.
The Banco de Guatemala issued its own first bills with the new characteristics and designs in denominations of 50 centavos of a Quetzal, 1, 5, 10, 20, and for the first time 100 Quetzals; dated September 15, 1948. It also continued minting coins with the values of 25, 10, 5 and 1 centavo of a Quetzal.
On August 20, 1964, under the rule of Colonel Enrique Peralta Azurdia, Law Decree number 265 was issued; Law of Monetary Species, which determined that the coins that could be issued as of that date would be those of 50, 25, 10, 5 and 1 centavos of a Quetzal, fixing each one with its different alloys, as well as the quantity of metals, weight, design, diameter and width. On the other hand, denominations in bills were fixed of 50 centavos of a Quetzal, 1, 5, 10, 20, 50, 100, 500 and 1000 Quetzals, fixing the attribution of determining the dimensions, designs, and mottos to the Monetary Board, according to article 6 of the Monetary Law.
On January 6, 1997, Decree No. 139-96 was issued by the Congress of the Republic that contained the new law of Monetary Species. This decree came to fill the need that had been observed years ago as to regulating the new characteristics of monetary species, making it easier for commercial operations in which cash money is used and, at the same time, conforming to the new technology developed by currency making companies. In this Decree, the possibility of issuing the 200 Quetzal bill was included.
The last modification, in the characteristics of monetary species, corresponds to the established through Decree Number 92-98 of the Congress of the Republic, on November 26, 1998, which reformed the reverse design of the Quetzal. In that sense, the Agreement of Long and Lasting Peace, subscribed on December 29, 1996 between the Government of the Republic and the Guatemalan National Revolutionary Unit, historic event that, due to its transcendence must remain within the context of everyday life of the Guatemalan, which was established as the main motto of legal course currency.
The one Quetzal coin, therefore, will have the inscription “Peace” as part of a stylish dove, with the motto “PAZ FIRME Y DURADERA” (Long and lasting peace) and “29 DE DICIEMBRE DE 1996” (December 29, 1996), as well as the denomination and the name of our national currency.