The Time Has Come to Permanently Retire All Our Caribbean Currencies

12 Pages Posted: 17 Jun 2019

See all articles by DeLisle Worrell

DeLisle Worrell

DeLisle Worrell and Associates, Inc.

Date Written: May 31, 2019

Abstract

The currencies of Caribbean countries have now outlived their usefulness, and have become a liability. They were devised at a time when most payments were made using notes and coin, issued in distant metropolitan centres. Scarcity of the means of payment was a severe hindrance to commerce. In response Currency Boards were set up, to issue local currency as needed in the colonies. The system worked well because the local currency issue was backed by an equivalent value of Sterling, in a global system of fixed exchange rates. In contrast, nowadays payments are made mostly by electronic communication, credit and debit cards, cheques and drafts, with settlement over digitized bank accounts. In today’s world an own currency has become a liability for small economies, limiting access to international goods and services, exposing residents to risks of currency devaluation and inflation, eroding the value of domestic savings, increasing economic inequalities, providing a tool for unproductive government spending, and diverting attention from the need to increase productivity and enhance international competitiveness.

Keywords: Dollarisation, exchange rate, foreign currency, Currency Board, open economy

JEL Classification: F31, F32

Suggested Citation

Worrell, DeLisle, The Time Has Come to Permanently Retire All Our Caribbean Currencies (May 31, 2019). Available at SSRN: https://ssrn.com/abstract=3400180 or http://dx.doi.org/10.2139/ssrn.3400180

DeLisle Worrell (Contact Author)

DeLisle Worrell and Associates, Inc. ( email )

Glenisla
Fisherpond
St. Jospeh BB21000
Barbados

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