ECCB Celebrates 49 years of Strength and Stability of EC Dollar Peg
The Eastern Caribbean Central Bank (ECCB) is commemorating 49 years of the EC dollar being pegged to the US dollar at a fixed rate of EC$2.70 to US$1.00.
Governor, Timothy N. J. Antoine says, “this is a tremendous achievement by the collection of Small Island Development States (SIDS) of which we ought to be justifiably proud.”
The Governor praised the important decision the framers and founders took on 7 July 1976 to move the peg from the pound sterling to the US dollar, as the United States had become the region’s major trading partner at the time. “What the decision has done more than anything is to allow us to enjoy relatively low inflation,” Governor Antione said. “Typically, over the 49 years, inflation has been between two and three per cent on average, except for years like in 2022, during the pandemic, when it went to nine per cent,” the Governor added.
Apart from enjoying relatively low inflation, Governor Antoine says that the peg also gives confidence in the strength of the EC dollar. “It sends a very important signal not only to locals, citizens and residents but also to investors,” he said. Additionally, there are no exchange rate controls, this, Governor Antoine explains, means that “when you need foreign exchange, you go to your bank and if the commercial banks do not have it, then they can buy it from the Central Bank which keeps a ready and ample stock of reserves at all times.”
Forty-nine years of monetary stability is therefore a wonderful achievement by the governments and people of Eastern Caribbean Currency Union and long may that continue, Governor Antoine says.
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What about the value of the US dollar falling?
We here in Antigua and Barbuda and I strong believe in the rest of the OECS do not really appreciate the kind of wonder we have when we established a currency union even before the EU. And that this currency union has remain very strong from the beginning. We seem not to even wonder how it is that we are not effected by world financial crissises such as the 2008 financial crisis. We buy foreign currency withourt any thought or concern as if we are buying a bread and cheese at the bakery. In some of our caribbean islands the central bank has to issue foreign exhange stop and the exchange rate fluctuates from day to day. While we have never had such an experience with the USA peg at $2.7169 buying rate and $2.68 selling rate. And furthermore, a tourist can come with his/her currerncy mainly US Dollar, Can Dollar, Euro and Pond and has no problem exhanges it at many establishements for little or no difference then the bank rate. Those with credit cards, whether in EC Dollar or US Dollar can use this form of payment whereever they travel to in the world. Don’t have to wonder if their card would be accepted. But we owe that all to the skillfull management of the people at our central bank. Every day importers pay their suppliers in hundreds of thousands of US Dollars without concern where those US Dollars are going to come from. And the ordenary man/woman can also shop online anf buy all the goods their heart desires. One can only wonder, will this last forever or will there one day be a limit as to the foreign exhange we can buy when making purchases online or on vacation. I once travelled with a business partner from Trinidad, and he had to make sure his spending was secured with US Dollars at his bank at home. So is he had a security of US5000.00 back at home he could not charge more then that on his card. Another friend of mine used to call me and ask for favors to purchase good for him for his business from a supplier in Canada. All this because his country didn’t allow him that much of Canadian dollars to spend. I therefore must say, we are spoiled rotten and spend therefore without any care. But many people my age would know that was not always so. We too had a time when the Minister of Finance needed to sign of on yoru warrant for the bank to allow you the foreign exhange to pay for your goods. Those days their was a black market in buying and selling US Dollars. In particular the taxi drivers had much of the US Dollars which they got from the tourists they transported. And hotel also had enough US Dollars from the guest who stayed at their hotel.
I wonder though if it time to educate the people to be a bit more concern when they buy US Dollars and who the send it to. Last I was speaking to a business owner doing business with companies in Greneda and in Trinidad and both suppliers invoiced him in US Dollars. I told him he should not be sending US Dollars to them because that is not their country’s currency. He should be sending EC Dollars to Greneda and TTDollars to Trinidad. Because what those suppliers are doing is actualy using our foreign exchange to prep up theirs. Sad to say he didn’t see the problem in this and continued paying his suppliers in the currency they invoiced him.
I do want to congratulate the Central Bank Govenor and Staff for having staired our financial ship through stormy seas and kept us a float without us having any worries whatsoever. And I also like to thank the guidance the Finance Ministers of the Member Islands give to the Centrral Bank. together they do what many can only dream of. Having a One Currency Union and still seperate economies.