Eritrea was part of the Ottoman Empire from 1557 to 1865, and under Egyptian rule from 1865 on. Italy began settling Massawa in 1885 and purchased the port of Aseb. Italy interpreted an 1889 treaty as giving it a protectorate over Eritrea, though Ethiopia disagreed. Eritrea was created on January 1, 1890 when Eritrea became an Italian colony, and Eritrea was used as a base to invade Ethiopia in 1936. On June 1, 1936 Eritrea was incorporated into Italian East Africa. Eritrea fell under British military administration between 1943 and 1950 and under civil administration between 1950 and 1952. Eritrea became part of a federated Ethiopia on September 15, 1952, but on November 14, 1962, Haile Selassie dissolved the federation and absorbed Eritrea into Ethiopia. Eritrea began a guerilla war that ended with Eritrea declaring its independence on May 24, 1993.
Italian silver coins (ITL), minted in Rome and Milan, circulated in Eritrea in the early part of the twentieth century. The Tallero d’Italia (XITT) was similar in size to the Maria Theresa Thaler (XMTT) and was meant to displace the Maria Theresa Thaler, but failed to do so.
When Eritrea was incorporated into Italian East Africa, the Italian East Africa Lira (AOIL) was introduced at par with the Italian Lira. After Ethiopia was liberated from the Italians in April 1941, the British administered the monetary affairs of Eritrea during the war and introduced the East Africa Shilling (XEAS) into the country. The East Africa Shilling was issued by the East Africa Currency Board and was divisible into 100 Cents. Egyptian Pounds were also in use, though they were phased out in the 1940s. Maria Theresa Thalers, Indian Rupees and the British Pound Sterling were also legal tender under British administration.
On July 23, 1945, the Ethiopian Dollar (ETD) was introduced in Eritrea with 1 Ethiopian Dollar equal to 2 East African Shillings or 0.66 Talari. The Ethiopian Dollar became the sole legal tender on October 1, 1952 when Eritrea was incorporated into Ethiopia. On September 21, 1976, Ethiopia replaced the Ethiopia Dollar with the Ethiopia Birr (ETB) at par. The Dollar was divisible into 100 Cents, and the Birr into 100 Senteems. Banknotes were issued by the State Bank of Ethiopia from July 1945 until January 1964, and by the National Bank of Ethiopia after 1964.
Eritrea gained its independence on May 24, 1993, but continued to use the Birr until November 8, 1997 when Eritrea introduced its own currency, the Nakfa (ERN), which originally was at par with the Birr, but now trades at a discount. The Nakfa is divisible into 100 Cents and is issued by the Bank of Eritrea.
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