A stable EC currency: a story of success

Ambassador of the United States of America, Barbados and the Eastern Caribbean, Larry L. Palmer

Ambassador of the United States of America, Barbados and the Eastern Caribbean, Larry L. Palmer is impressed with the stability of the Eastern Caribbean Currency.

Speaking with reporters at the US Embassy in St George’s, earlier this month, the ambassador said that in a recent meeting Governor of the Eastern Caribbean Central Bank (ECCB), Sir K. Dwight Venner, spoke of the stability of the EC dollar. He said Venner relayed to him that the EC$ has been stable for many years and that it is among the most stable currencies in the world.

“This shows that this is a vibrant region, a region that works together.  There’s cooperation within the region and with countries outside the region and we’re very pleased with the relationship we’ve had with all those countries”, the ambassador said.

The ambassador’s statements compliment the ECCB’s report on the performance of the Bank during the last financial year, 1st April 2011 to 31st March 2012 issued last week.  It states that the backing of the currency remains well above the legal limit of 60 per cent as well as the operational limit of 80 per cent, averaging 96 per cent over the last financial year.

The report says that the real effective exchange rate has remained within the range set by the central bank and is considered to be in line with competitive levels.

The import cover, a measure of the adequacy of foreign exchange reserves to meet the region’s import bill, averaged over 4 months. This is above the benchmark of 3 months set by the IMF.

The bank reported that its financial performance was impacted by the global crisis. It realized a net income of $11.7m as compared to the previous year’s income of $22.6m. Contributing to this was a reduction in commission income on foreign transactions and lower gains on the sale of securities.

As at March 2012, the total assets of the Bank stood at $3.3 billion as compared with $2.8 billion for the previous year. This was mainly due to inflows of grants and loans to member governments from international institutions. Also contributing to this increase was the reinvestment of income on foreign assets and gains on the sale of foreign securities held within the ECCB’s foreign reserve portfolio.

According to the report the adverse impact of the global crisis has led the Bank to concentrate its efforts and resources in four areas, namely, financial stability, fiscal and debt sustainability, money and capital market development and sustainable growth and development.

The ECCB says the major challenge facing countries in the region is the return to growth at a sufficiently high level to reduce unemployment to reasonable rates, to lower poverty levels, and to assist in maintaining the human development indices at their current levels and improving them where warranted.

The ECCB was established in 1983 as the monetary authority for eight countries of the region – Anguilla, Antigua and Barbuda, the Commonwealth of Dominica, Grenada, Montserrat, St Kitts and Nevis, St Lucia and St Vincent and the Grenadines. The mission of the bank is “to maintain the stability of the EC dollar and the integrity of the banking system in order to facilitate the balanced growth and development of member states”.

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