It was not until 1897 that the government of the Straits Settlement was first authorized to issue currency notes (by Ordinance NO.8 of 1897, which came into operation on 31 August 1898). The first notes were in denominations of 5 Dollars and 10 Dollars and were dated 1 September 1898.
One dollar notes were issued in 1906. Meanwhile, both the Chartered Bank and the Hong Kong and Shanghai Bank continued to issue their own notes, which circulated side by side with the official notes.
All were freely convertible to the various silver dollars - Mexican, British, Hong Kong, and Japanese - that were legal tenders in the colony. As time passed, non-Straits Settlements currencies were slowly phased out. The rest of the silver coins - Mexican, British and Hong Kong dollars -ceased to be legal tender with effect from 31 August 1904, after the Straits Settlement(Coinage) Order of 1903 authorized the minting of the Straits Settlement dollars. All was well until World War I, which drove the price of silver (silver was a strategic metal during the war) to such a height that the silver in the coin was worth much more than its face value.
As a result, silver coins disappeared as some people started to hoard them, while others found it more profitable to melt them down for resale. The authorities decided to reduce the bullion value, or the silver content, of the dollar.
They withdrew the coins and replaced them with 1 Dollar notes. On 8th October 1938, Currency Ordinance No.23 of 1938 was passed for the establishment of the Board of Commissioners of Currency, Malaya (BCCM) to issue currency notes and coins in the Straits Settlement and the Malay State. By the time the Japanese invaded Singapore in 1942, only one regular currency issued by the BCCM remained in circulation.
