From the latter half of the 19th century until the outbreak of the first world war, a monetary union, based on the British gold sovereign existed in a part of the British Empire. This sterling part of the British Empire mainly consisted of Australia, New Zealand, the British Islands in the Pacific, British Southern Africa, British West Africa, The British West Indies, Gibraltar, Malta, and the South Atlantic territories. It had been the plan of the British government in 1825 to have sterling coinage circulating in all of the British colonies. But, by the 1860s, the British government had given up trying to impose sterling coinage in territories such as Canada, Newfoundland, British India, and Hong Kong against resistance from existing entrenched practices, just as the British East India Company has similarly given up trying to impose the rupee on the Straits Settlements. Eventually even India and the Straits Settlements adopted a sterling exchange standard, leaving only Canada, Newfoundland, British Honduras, and Hong Kong totally outside the sterling system.
In 1910, Australia introduced its own coinage in the likeness of sterling coinage. It was much the same as United Kingdom coinage, differing mainly in the use of distinctive Australian symbols on the reverse. At the same time, the law prohibited Australian banks from issuing banknotes, and such authority was reserved for the newly formed Commonwealth Bank. This left an interesting situation in which Australian private banknotes were limited to circulation in New Zealand, and such Australian notes were so marked with the words New Zealand. This action by Australia in issuing its own national variety of sterling coinage had no practical effect on the monetary union as such. Initially these Australian coins were minted at the Royal Mint at Tower Hill London, despite the fact that there were three Royal Mint branches operating in Australia at that time. The reason was that these Australian branch mints in Sydney, Melbourne, and Perth only had the facilities to mint gold sovereigns. However, by 1916, the Australian varieties of sterling coinage were being minted locally.