What is the ‘IEP (Irish Pound)’
IEP (Irish Pound) was the foreign exchange (FX) currency symbol, for the Irish pound, the money of Ireland until 2002. The Irish pound comprised 100 pennies, called pingin or in Irish, and often appeared with the symbol £ or IR£ to set it apart from other currencies based in pounds. The Irish term for the Irish pound is the punt Éireannach.
BREAKING DOWN ‘IEP (Irish Pound)’
IEP dates back to the first millennium C.E. Following the Act of Union, which joined Ireland and Great Britain into one kingdom, this first Irish pound assimilated into the British Pound.
After the Irish Free State formed in 1922, trade with the U.K. continued to dominate the Irish economy. The government did not see the need to prioritize the creation of a new currency. It wasn’t until 1927 that the Irish government began issuing the Irish pound, pegging it to British sterling at parity. The government also promised full convertibility to the Great British Pound (GBP) sterling.
For more than a decade, the Irish government managed its currency through a Currency Board. In 1942, the legislature passed a law to establish the Central Bank of Ireland. Even after creating the new monetary authority, Ireland retained pegging of its pound to the pound sterling. This practice continued still after Ireland departed from the Commonwealth and declared a Republic in 1948. When the pound sterling was devalued within the Bretton Woods system in 1949, and again in 1967, Ireland did not change its currency’s pegging.
The 1970s were a decade of monetary reform in Ireland. First the nation decimalization the Irish pound and then with the Central Bank Act of 1971. This Act delegated new powers to the monetary authority and ultimately led to Ireland’s participation in the European Exchange Rate Mechanism (ERM) in 1978. In 1979, the formal link with the British Pound was, at last, broken.
The Euro Replaces the Irish Pound
Momentum for the creation of a single, pan-European currency began to gather support in 1986, with the signing of the Single European Act, setting the stage for a market without frontiers. A logical complement to this borderless market would be a single, unifying currency.
Ireland was one of the earliest countries to adopt the euro on the first of January, 1999, fixing the value of the Irish pound to the euro at the rate of 0.787564 Irish pounds. For three years, the euro existed as a virtual currency for bookkeeping purposes. It wasn’t until January 2002 that the circulation of euro banknotes and coins in Ireland began.
According to World Bank data, Ireland experiences a negative 0.3% annual inflation rate deflator and has a gross domestic product (GDP) growth of a 7.8%, as of 2017, which is the most current year of available data.