Governor of the Eastern Caribbean Central Bank (ECCB), Grenadian Timothy Antoine is urging the governments of the sub-regional Organisation of Eastern Caribbean States (OECS) to maintain their fiscal discipline in monetary matters.
Antoine who took up the job of ECCB Governor just over six months ago was recently vacationing in Grenada and appeared on a local radio programme.
He said the need for fiscal responsibility is not just for governments to become fiscally prudent but also for the long-term protection of the regional dollar.
“I’m calling for that because we recognise that we want governments to have flexibility. When things are down, they should be able to spend more, when things are up, they should be able to spend less. To do that you have to be fiscally responsible”, the ECCB Governor told the host of the programme.
Antoine announced that debts and other external payments due by regional governments are paid through the ECCB.
“It is more efficient for them to do it through us. It is more efficient for them to receive their foreign currency through us and to pay out through us because we have access to the whole system,” he said.
The ECCB Governor also looked at the strength of the Eastern Caribbean (EC) Dollar, which has been pegged to the US Dollar for the last 40 years.
One US Dollar is equal to EC$2.7169 since 1976.
According to Antoine, since then it was recognised that the United States was one of the sub-region’s major trading partners, it made sense to have the EC Dollar pegged to the US Dollar as a major international reserved currency because the Eastern Caribbean islands were doing a lot of trading in US Dollars.
Antoine said that by maintaining a strong dollar through the backing of the currency, the ECCB has been able to maintain stability in the system for the last 40 years.
“The value of the EC Dollar comes not from the fact that we issue the dollar… the value comes from the fact that the foreign reserves are there to back that dollar,” he remarked.
Another reason cited for the strength of the EC Dollar is that the ECCB does not print the money, although there is a necessity from time to time to replace the old notes.
Notes and coins are produced by providers in the United Kingdom, and Canada respectively for the ECCB.
Antoine said money is not lent by the ECCB to OECS governments by any fashion.
He said whenever money is issued, the bank has to ensure that it is backed by foreign currency.
“We have a limit on how much we can lend, and there is a veryparticular reason why we do that – to ensure that the EC Dollar is protected. If we lend them willy-dilly … the value (of the EC dollar) will fall and we don’t want that. This is why we’re very careful,” he said.
The Eastern Caribbean Currency Union comprises eight Territories – Anguilla, Montserrat, Grenada, Antigua/Barbuda, Dominica, St. Kitts/Nevis, St. Lucia, and St. Vincent and the Grenadines.