The Central Bank of Curaçao and St. Maarten (CBCS) again stated that it had been asked by the two countries in the monetary union (see Thursday paper) to prepare for the introduction of a new joint currency to replace the Antillean guilder left over when the Netherlands Antilles was dismantled. This took place effective 10-10-10 and the intention even before then had been to establish a Caribbean guilder.
More than decade later this has still not occurred, an example of the kind of indecisiveness that unfortunately often characterises the two governments in Willemstad and Philipsburg. Part of the reason for all the delay may also be that many, including former CBCS president Emsley Tromp, favour dollarization instead.
One must remember that continuing to share the central bank and currency was a condition placed back then by the Netherlands for Curaçao and St. Maarten to achieve country status. However, Dutch State Secretary of Home Affairs and Kingdom Relations Raymond Knops recently announced a study by the International Monetary Fund (IMF) regarding a possible switch to the US dollar.
The latter was introduced as main currency in the so-called BES islands (Bonaire, St. Eustatius and Saba) when they became overseas public bodies of the Netherlands per the same aforementioned date and that experience apparently played a role in now wanting to see if this should be done for St. Maarten and Curaçao too. The latter country actually had plans to increase the foreign exchange licence fee, so it would be interesting to see how this revenue-generating charge on international transactions might be impacted in case a choice for dollarization is made.
The IMF will also examine the workings of the monetary union in general and the financial sector supervisor role of CBCS, as part of the agreed-on conditions for continued coronavirus-related liquidity loans. However, while solid research is always welcome to ensure informed decision-taking, the currency issue has dragged on far too long already and it is high time to cut this “Gordian Knot” once and for all.
