The Haunting Past: Politics, Economics and Race in Caribbean Life: Politics, Economics and Race in Caribbean Life by Alvin O. Thompson

Author:Alvin O. Thompson [Thompson, Alvin O.]
Language: eng
Format: epub
Tags: Political Science, General
ISBN: 9781317456506
Google: 1MvKBgAAQBAJ
Goodreads: 55410956
Publisher: Routledge
Published: 1997-01-01T00:00:00+00:00

Proliferation of regional currencies

The proliferation of regional currencies since independence is another major barrier to regional trade and finance. For instance, seven different currencies exist among the Anglophone members of CARICOM, only two of which (Barbados and Belize) are on par with each other. On 25 December 1995, the local dollar values to the US dollar were; the Bahamas at $1.00, Barbados and Belize at $2.00, the OECS at $2.70, Trinidad and Tobago at $5.77, Jamaica at $36.50, and Guyana at $139.0.26 These rates of exchange were established without consultation with other member countries. In Trinidad and Tobago, Guyana and Jamaica they were also varied from time-to-time, and government exchange regulations in the 1980s forbidding their currencies to be traded outside the issuing countries ruled out their being exchanged in other CARICOM member countries.

The desirability of a single currency within CARICOM is obvious and the possibility of creating one has been mooted. However, it would require a great deal of political will and an equal measure of economic sacrifice in the short term in order to realise it. Among the benefits perceived would be limits on individual governments’ capacity to create new money arbitrarily and thus increase inflation; accelerated investment in exportable goods, tourism and international services; increased regional and extraregional trade; pooled foreign exchange reserves; and possibly a stabilisation fund to which the most heavily indebted countries would have controlled access.27

Judging from the experience of the EU, it will take a long time for full monetary union to develop, and it will have to be created by stages. What is required immediately is a regime which allows for the free convertibility of currencies within the region. The CARICOM governments agreed in principle in 1995 to a limited convertibility of their currencies,28 but this awaits implementation by the individual countries. These agreements are needed for all Caribbean countries. It should be understood that Caribbean countries would be permitted to pay outstanding debts to each other in one or more Caribbean currencies, and not necessarily in hard currencies, as some have been demanding. Such minimal arrangements are critical if the region is going to make meaningful strides in the near future in the development of intraregional trade, markets and banking.

The power of the Yankee dollar is a prevailing financial reality. It is the only currency which is accepted without reservation by all strata of society and at all levels of business operations. Other hard currencies, such as those of the United Kingdom, France, the Netherlands, Germany, Canada and Japan, are variously accepted by different groups, but do not have nearly such a wide appeal. The US dollar is the legal tender in Puerto Rico, the US Virgin Islands and the Turks and Caicos Islands, and it is virtually interchangeable in business transactions in the Cayman Islands, Bermuda and the Bahamas.

In the other countries the local currencies are pegged to the US dollar at specific exchange rates, the international values of the local currencies rising or falling with that of the US dollar.

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