Dr Worrell Suggests Caribbean Move To US Dollar
A leading Caribbean economist has suggested that the islands “permanently retire” their currencies, and move to the US dollar.
“Caribbean currencies served a crucial purpose when they were first introduced, but they have now become a nuisance in today’s digitised world”, Barbados-born economist Dr. DeLisle Worrell said, adding that it is “time to permanently retire all our Caribbean currencies”.
In his working paper on the matter, which lists a number of islands including Bermuda, Dr. Worrell said, “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.
Dr Worrell — who was appointed to the Bermuda Financial Policy Council last year – added, “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.”
“Exclusive use of US dollars would alleviate a major headache for the Caribbean and small countries around the world, namely the wholesale loss of correspondent relationships with international banks which deal in US dollars,” he added.
Click here to read the full paper.
