Exploring the Evolution of Currency in the Maldives: From Cowrie Shells to Bitcoins

Cowrie and Other Natural Materials

Initially, different natural elements served as money. Among these, cowrie was a notable item, first used as currency around 1200 BC. Although cowries might appear unusual as a medium of exchange today, they offered several benefits. They are small and nearly uniform in size, and they are also highly durable.

Counterfeit Currency

Counterfeiting money has been a practice since currency was first introduced. Even wampum fell victim to fraudsters. The issue of counterfeit became so widespread globally that harsh punishments were implemented to prevent it.

In fourteenth-century China, a warning on currency stated that forgers would face beheading. In England, counterfeiters were burned at the stake. Similarly, in the early American colonies, counterfeiting was punishable by death.

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Coins

Metal was used as money in Babylon as early as 2000 BC. However, standardized and certified coinage likely did not start until the seventh century BC. Many historians believe that coins were administratively introduced in Lydia (modern-day Turkey) around this period. During King Aliat's reign (610 BC to 560 BC), coins were made from electrum. 

Electrum is a natural alloy of gold and silver. The royal emblem was the lion. Aliat's son, Croesus (who reigned from 560 to 546 BC), transformed the state's monetary system by introducing silver and gold coins. The use of coins soon spread to other regions of the world.

Canvas Painting 60X90 ,Bodulaari/dhigu laari, Mohori

Historical Context of Currency in the Maldives

The Maldives' monetary history began with cowry shells (Cypraea moneta), known locally as boli, used as a medium of exchange and recorded in trade with Asia and Africa as early as the 13th century (Currency of Maldives). By the 16th century, silver strips called dhigu laari, minted during the reign of Sultan Ibrahim III (1585–1607), became standard in the Indian Ocean trade (Maldivian rufiyaa). This evolved into the modern rufiyaa, introduced in 1947,

Dhivehi Karudhaas Bai rufiyaa

replacing the Ceylonese rupee at par, with banknotes issued under government authority (Maldivian Rufiyaa (MVR): What it is, Example).

Before the establishment of the Maldives Monetary Authority (MMA) in 1981, the government managed currency issuance. Historical records indicate that in 1945, the Maldivian Parliament passed a bill for banknotes in denominations of Rf. ½, Rf. 1, Rf. 2, Rf. 5, and Rf. 10, circulated from September 1948, with higher denominations like Rf. 50 and Rf. 100 added in 1951 (Maldivian rufiyaa). Coins, initially minted abroad (e.g., UK in 1913), complemented these notes, reflecting early efforts to formalize the monetary system (Currency in the Maldives | Koda Sail).

Establishment of the Central Bank and Monetary Policy Evolution

Cowrie shells were used as a form of money and dice in various traditional board games

The MMA was established on July 1, 1981, under the Maldives Monetary Authority Act 1981, taking over currency issuance and formulating monetary policy to achieve price stability (Maldives Monetary Authority). This marked a shift to a centralized approach, with the MMA responsible for regulating the availability of the rufiyaa, managing licenses, and supervising financial institutions. In April 2007, the MMA Act was amended to grant full autonomy, enhancing its role in monetary policy implementation (Maldives Monetary Authority - Central Banking).

Monetary policy in the Maldives has focused on maintaining exchange rate stability, given the economy's reliance on tourism and imports. The rufiyaa was pegged to the US dollar, with a limited float announced in 2011, reflecting efforts to manage external imbalances (Currency of Maldives). Recent IMF reports highlight the need for tighter monetary policy to safeguard this peg, especially amid fiscal vulnerabilities (IMF Staff Completes 2024 Article IV Mission to the Maldives).

Money Supply Trends and Economic Impact

Data on money supply, measured as broad money (M2), shows significant growth over time. From 5.9 billion MVR in March 2005 to 56.84 billion MVR in September 2024, the increase reflects efforts to support economic activity (Money Supply Data for Maldives). Detailed breakdowns include M0, M1, and M2, with recent figures indicating M2 at 56.383 billion MVR in July 2023 (Maldives Money Supply M0, M1, M2, M3 in Maldives 2024 | Take-profit.org).

The impact of this money printing on the economy has been mixed. Historically, inflation has remained low, averaging 2-3% in recent years, suggesting that money supply growth has been absorbed by economic expansion (Maldives - inflation rate 1989-2029 | Statista). GDP growth rates, averaging 7% during 2006-19 and rebounding post-COVID-19, indicate that monetary policy has supported tourism-driven growth (Maldives GDP Annual Growth Rate). However, during the 2020 pandemic, with GDP contracting by 32.9%, increased money supply (from around 35 billion MVR in 2020 to 40 billion MVR in 2021) provided liquidity, aiding recovery (Worldometer - Maldives GDP).

Detailed Data Table: Money Supply and Inflation Trends

Below is a table summarizing key monetary and economic indicators for the Maldives, based on available data:

Year	Money Supply (M2, billion MVR)	Inflation Rate (%)	GDP Growth Rate (%)
2005	5.9	-	-
2010	15.5	4.5	8.7
2015	25.3	1.8	2.8
2020	35.0 (approx.)	-1.37	-32.9
2023	56.84 (Sept)	2.93	5.9

Note: Data sourced from TheGlobalEconomy.com, Maldives Inflation Rate 1986-2025 |

MacroTrends, and World Bank Data. Some values are approximate due to data availability.

Bitcoin

Legal and Regulatory Landscape

The legal framework for Bitcoin in the Maldives remains underdeveloped, with no comprehensive legislation specifically tailored for cryptocurrencies as of 2024. The Maldives Monetary Authority (MMA), the central bank, oversees digital currency activities and has expressed caution due to concerns about financial stability, potential misuse in illegal activities, and the lack of a robust regulatory infrastructure (The State of Cryptocurrency Regulations in Maldives, 2024). In 2018, the MMA announced that no organization or party had been granted permission to conduct financial transactions using cryptocurrencies, emphasizing its role as the sole issuer of the Maldivian currency under Law No. 6/81 (Maldives Monetary Act 1981) (Maldives & Cryptocurrency | Blockchain & Cryptocurrency Laws & Regulations). Despite this, there is no explicit ban, and individuals can still engage in buying and selling Bitcoin, creating a legal gray area.

Recent updates suggest this cautious stance continues into 2025, with no significant changes reported. The MMA's position reflects a balance between openness to digital innovations and concerns about economic stability, particularly given the Maldives' small economy, heavily reliant on tourism and fishing.

Business Adoption and Usage

Bitcoin adoption among businesses in the Maldives is notably limited, with only a few instances of acceptance identified. The most prominent example is Soneva, a luxury resort chain, which began accepting Bitcoin and Ethereum at its properties in the Maldives (Soneva Fushi, Soneva Jani, and Soneva in Aqua) and Thailand in 2022 (Bitcoin Is Now Accepted In This Popular Resort In The Maldives | Bitcoinist.com). This adoption is facilitated through partnerships with cryptocurrency payment solutions like TripleA and Pomelo Pay, aimed at providing convenience for international visitors. Verification on Soneva's website confirms Bitcoin remains a payment option, indicating sustained adoption in this sector (Bitcoin is listed as a payment method).

Beyond resorts, there is little evidence of other businesses, such as shops or local establishments, accepting Bitcoin. A website for a "Maldives Bitcoin Resort" suggests another potential case, but it appears focused on selling the property using Bitcoin rather than regular transactional use, limiting its relevance to everyday commerce.

User Practices and Investment Trends

For individuals in the Maldives, Bitcoin usage appears primarily investment-driven. Residents can buy and sell Bitcoin through various cryptocurrency exchanges, including Binance, OKX, Kraken, Paxful, and others, with options for payment methods like credit/debit cards and bank transfers (4 Best Exchanges To Buy Bitcoin in Maldives (2024), Buy Bitcoin in Maldives – Secure & Fast | Paxful). These platforms cater to both beginners and advanced traders, with features like low fees and multiple currency support, suggesting accessibility for investment purposes.