Silence central bank on monetary union

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The 2017 Annual Report of the Central Bank of Curaçao and St Maarten (CBCS) makes a mockery of its mission to provide a thorough monetary and policy review of our monetary union (MUCS). Antilliaans Dagblad reported last week that the 2017 Annual Report contains only five of the usual twelve chapters. Additionally, the newspaper reported that the CBCS was unable to provide an explanation for the shrunk-down report. 

I would’ve advised against a shortened report. This, because the MUCS is dangerously off-course, and mainly because the CBCS needs damage control amid grave accusations against its former President and a questionable role as regulator in the case of a local insurance company. 

I’ll restrict my comments to the MUCS which was imposed by The Netherlands because it didn’t trust St Maarten back in 2008 to have its own central bank. Curaçao was compelled to accept the monetary union.

What’s missing from the aforementioned report are policy considerations regarding the coordination of macroeconomic, fiscal/financial policies and an adequate structure to accomplish this much needed convergence. These coordination mechanisms don’t exist between the two countries while they should be a top priority. During a CBCS-organized meeting in 2016, an Eastern Caribbean Central Bank senior officer stated that a monetary union without macroeconomic policy coordination among members is doomed to fail. History backs him up. In our case, St Maarten and Curaçao each has it own economic policy, tax code, budget management, labor policy and so on. As the years pass by, the two countries that used to belong to the Netherlands Antilles drift apart, each choosing its own path which is fine if they were not in a monetary union. 

How many times have the Ministers of Finance of Curaçao and St Maarten discussed coordination of policies? When was the last time they did? Whatever came out of those meetings? St Maarten has on many occasions favored adopting the US Dollar. The former CBCS President went on a road show a few years ago arguing in favor of the US currency for Curaçao because he didn’t ‘trust the local politicians with our finances’. Many of the Curaçao politicians in Government today wanted to step out of the monetary union a few years ago. Then, they belonged to the opposition. Some were in favor of the US Dollar, some not. Where are we today? Not only the CBCS report is mute on these matters. So is the Government. Not even the Governor General last week in her speech at the opening of the new parliamentary year recognized the importance of a well functioning monetary union. 

There are more relevant questions that remain unanswered. How is this lack of coordination going to influence the CBCS role combatting money laundering and terrorism in two different countries with no policy coordination on these matters? I could go on, but at times I feel as if I’m the only one who thinks that these issues are important. Silence on these issues is not going to solve anything however.

Willemstad, Curaçao

Author: alexdavidrosaria

Alex Rosaria is from Curaçao. He has a MBA from University of Iowa. He was Member of Parliament, Minister of Economic Affairs, State Secretary of Finance and United Nations Development Programme Officer in Africa and Central America. He is an independent consultant active in Asia and the Pacific.

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