Saint Kitts and Nevis is a twin-island country in the West Indies in the Lesser Antilles. With an area of 261 square kilometers and a population of approximately 50,000, it is the smallest sovereign state in the Western Hemisphere and the world's smallest sovereign federation. Its capital city, Basseterre, is situated on the larger island of Saint Kitts. The islands were among the first in the Caribbean to be colonized by Europeans and gained independence from Britain in 1983.
The twin-island federation has a diverse economy centered around tourism, agriculture, and light manufacturing. While sugar was once the main export, the agricultural sector has been diversified due to rising costs and low world market prices. The government closed down the state-owned sugar company in 2005 to reduce fiscal deficits. Tourism plays a crucial role in the economy, with significant growth since the 1970s, although it was affected by the global financial crisis. The government has also focused on diversifying the economy through agriculture, tourism, export-oriented manufacturing, and offshore banking. In 2015, a tax agreement was signed with the Republic of Ireland to promote international cooperation in tax matters.
The country’s official currency is the East Caribbean dollar, although the US dollar is widely accepted in Saint Kitts and Nevis, despite not holding legal tender status.
The currency history of St. Kitts closely aligns with that of the British Eastern Caribbean territories. Even after the introduction of the gold standard in the West Indies following Queen Anne's proclamation of 1704, the circulation of silver pieces of eight, including Spanish and later Mexican dollars, persisted well into the nineteenth century.
In 1821, Britain adopted the gold standard, leading St. Kitts to adopt the sterling currency in 1849 officially, and Nevis in 1858. However, the circulation of British coins coexisted with the continued use of dollar accounts in the private sector. The international silver crisis in 1873 marked the end of the silver dollar era in the West Indies and caused the demonetization of silver dollars in St. Kitts.
In 1949, with the introduction of the British West Indies dollar, the currency of St. Kitts became officially linked with that of the British Eastern Caribbean territories. Eventually, the British sterling coinage was replaced by a new decimal coinage system in 1955, with the new cent being equivalent to half of the old penny.