The following are from Malaysia Brunei & Singapore Banknote & Coins 8th Edition by KN Boon about the history of Straits Settlement banknote.
In 1511, the Portuguese under Alfonso D'Albuquerque captured Malacca to use as a base to control the eastern trade from Goa (Town in India) to Macau. The Portuguese introduced their coinage to adequately serve commerce. In 1580 when Spain and Portugal were united under a Spanish king, the Spanish Pieces-of-eight, worth 8 Reales was issued to Malacca.
In 1641, the Dutch wrested Malacca from the Portuguese. As expected, the new masters introduced their own money. The Dutch were unable to prevent the British East India Company from setting up a trading base in Penang in 1786.
Captain Francis Light introduced coins in silver copper and tried to establish the India rupee as the standard coin. However, the silver Spanish dollar, which had been introduced earlier by the Spanish in the Philippines and by the Portuguese in Malacca, reigned supreme as the most widely used currency in the region. Merchants used it as their standard by which the value of every commodity was estimated and by which all coins in circulation were measured. They were not willing to change to Rupees.
The outbreak of the Napoleonic wars in 1793 give the British the opportunity to capture Malacca, two years later. Province Wellesley was acquired in 1800 followed by Singapore in 1819. Five years later, by the Treaty of London, the Dutch ceded all rights in Malaya in return for Bencoolen in West Sumatra. Penang, Malacca, and Singapore were combined into the Straits Settlement in 1826 and were administered by the East India Company. From 1859 to 1867, they were ruled from India, as part of British India, until the Indian Mutiny ( 1857~59) forced the Indian government to transfer the straits settlement to the direct control of the Colonial government in London. In 1867, the Straits Settlement became a British Crown Colony.
