Yankee dollar

The discussion about switching from the Antillean guilder to the US dollar in Curaçao and St. Maarten when the Netherlands Antilles ceases to exist has died down somewhat since a symposium on the subject at the end of last year.

However, preparations for “dollarisation” continue unabated behind the scenes in financial circles in Willemstad, confirmed director Chicu Capriles of Maduro & Curiel’s Bank (MCB), the parent company of Windward Islands Bank (WIB), during a recent interview on TeleCuraçao.

The banker was quite candid about it, saying the move made sense considering the strong economic ties to the US. He added that the public would be duly informed in due time and every effort would be made for the process to go as smoothly as possible.

The fact that the BES islands Bonaire, St. Eustatius and Saba, which are to become special overseas bodies of the Netherlands, have already chosen for the US dollar – rather than the euro, which says a lot – plays a role as well. Maintaining an Antillean guilder only for the two islands in the process of becoming autonomous countries in the Dutch Kingdom simply is not worth it, also because the dollar already rules in St. Maarten. The latter is definitely the case and has been for years. In fact, if it were not for government and people having to pay a one per cent foreign exchange licence fee at the bank every time they take out dollars, most likely even fewer guilders would be in circulation on the Dutch side.

That’s why it’s hard to understand why the local political establishment appears to be dragging its feet on this issue. After all, a switch to the dollar on “The Friendly Island” with its one-pillar tourism economy and North America as predominant source market most likely would be much easier and less cumbersome than in Curaçao. Not only that, but if Curaçao goes the dollar route it would leave St. Maarten little choice, because an own currency just for the island considering the widespread use of the dollar is hardly worth considering. In addition, the agreement for the two future countries to continue sharing the Central Bank would lose much of its value, because the role of that institution would be severely diminished in case of ”dollarisation” and it probably would be replaced by a much smaller and less influential regulatory board to supervise the financial sector.

It’s noteworthy that Central Bank President Emsley Tromp is the main proponent of switching to the dollar, despite the strongly limiting effect it would have on the very institution he heads. His position apparently has been adopted by financial circles in Willemstad to the point where work is already underway it make it a reality.

St. Maarten should waste no time in doing its own homework. A switch to the dollar would indeed seem to make every sense in the world and at least would spell an end to the current undesirable practice of penalising local residents with a licence fee for doing business in the predominant currency.

(Source: The Daily Herald St. Maarten)

8 January, 2010

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