Initially, sterling circulated as the Tongan currencies, supplemented from 1921 by banknotes issued by the Tongan government. The notes were denominated in sterling and included the rather unusual denomination of 4 shillings. When the Australian pound devalued relative to sterling at the beginning of the Great Depression, this caused considerable confusion on the smaller islands of the British Western Pacific. In the mid-1930s, people in these islands were asking whether or not the money in their sterling accounts were to be considered as sterling or the Australian pound, and clarification was sought. In 1936, one Tongan pound was devalued to be worth 16 shillings sterling, setting the Tongan pound equal to the Australian pound. Existing banknotes had the word "sterling" overstamped, later issues omitted the word altogether. In 1967, the pound was replaced by the pa'anga at a rate of £1 = T$2.
