BASSETERRE, St. Kitts, CMC – St. Lucia’s Prime Minister Phillip J. Pierre Thursday night launched the yearlong activities marking the 40th anniversary of the Eastern Caribbean Central Bank (ECCB), urging the financial institution to continue to play a leading role in the socio-economic development of the sub-region.
The ECCB serves the islands of Antigua and Barbuda, Dominica, Grenada, St. Lucia, St. Vincent, the Grenadines, Sr. Kitts-Bevis, Anguilla, and the British Virgin Islands.
Pierre, who also serves as the chairman of the ECCB Monetary Council, told the ceremony held at the bank’s headquarters here that the financial institution must continue to help the people of the Eastern Caribbean Currency Union (ECCU) “whom we ultimately serve.”
He said concerning its relationship with banks and other financial institutions. He is pleased that the ECCB is “working on a market framework to address these concerns” and welcomed the plans for introducing deposit insurance.
“I also challenge the bank to continue constructive dialogue with credit unions and other indigenous institutions with a view of obtaining sustainability, continuity, efficiency, and profitability,” he said, adding, “as we reflect on the formative years of this institution and ongoing efforts to actualize its mission and vision, the achievement in the past 40 years are worthy of our collective commendation and applause.”
Pierre said since the inception of the “visionary agreement” establishing the ECCB in 1983, the ECCB has been an example of stability for the region, “a region, I hasten to add, that has survived many shocks of various forms and duration, the most recent being the (COVID-19) pandemic”.
He noted that the ECCB agreement was forged during a period of “great economic uncertainty,” adding that the “journey to its ratification and enactment was long and arduous framed by a transition from colonial role to independence and punctuated by a series of ….political integration and weather-related events”.
He said that the primary objective of the ECCB is to maintain the stability of the currency used by the islands within the sub-region and the integrity of the banking system.
He said the bank, since July 1976, has maintained the fixed exchange rate pegged to the US dollar at EC$2.70 (One EC dollar=US$0.37 cents) to one US dollar.
‘This arrangement has served the Currency Union extremely well. It has delivered relatively low inflation and confidence for both consumers and investors, thereby facilitating a stable environment for growth and investment,” said Pierre, an economist.
“It is a fact that the EC dollar is one of the most stable currencies in the entire world,” Pierre said, adding that the advantage of the monetary union was displayed during the pandemic “notwithstanding the complete shutdown of tourism, our lead foreign exchange earning industry.
‘The ECCU member countries were able to access foreign exchange to pay for their imports,” he said, adding that over the past 40 years, the bank has continually adapted to the changing needs of the member countries and the external environment.
He said while the 1990s was marked by the loss of trade preferential agreements for bananas at a time when the industry was at its peak, it also accelerated the region’s move towards the tourism sector.
“To support this transition, the ECCB focussed its attention on capital market development and the creation of a single financial space for households and firms,” he said, adding that this trust gave birth to several intuitions, such as the Eastern Caribbean Home Mortgage Bank, the Eastern Caribbean Securities Exchange, and the Regional Government Securities Market (RGSM).
“It is pleasing to note that member countries have raised more than EC$70 billion on the RGSM,” Pierre said.
Earlier, ECCB Governor Timothy Antoine told the ceremony that 40 years on, foreign reserves had grown from under US$150 million to over five billion dollars.
He said bank deposits had also risen from one billion EC dollars to over EC$24 billion, adding, “this evening, I confirm that our EC dollar remains intense with a current backing of 91 percent in foreign reserves.
“Our celebration of this milestone is especially gratifying because the past 40 years have been anything but smooth sailing. We have endured external and economic shocks, hurricanes, volcanoes, recessions, and, most recently, a pandemic. But here we are still standing, and lest we forget (we) were not given much hope or help hence our argument for reparatory justice to survive”.
Antoine recalled that after the demise of the British Currency Board, the Eastern Caribbean countries joined Barbados forming the Eastern Caribbean Currency Authority in 1965.
But he said one year later, after Barbados gained independence, it left, establishing its central bank in 1972, “we were on our own.”
He said an article by the St. Lucian-born Noble Prize winner for Economics, Sir Arthur Lewis, “paints a vivid picture of the constitutional crisis and psychological pain of the era.
“It is said in the challenge. There is opportunity. So what did we do? Fighting for survival, we eventually formed the Organisation of Eastern Caribbean States (OECS) in 1981 and the Eastern Caribbean Central Bank in 1983. The rest is history,” he told the audience.
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