As the Eastern Caribbean Central Bank (ECCB) marks 45 years of maintaining the EC dollar peg to the US dollar at a fixed rate of EC$2.70 to US$1.00, the Bank reflects, with pride, on the history of the EC dollar on this episode of ECCB Connects.
Retired Deputy Governor, Sir Errol Allen and Retired Deputy Director of the Research Department Eustace Liburd, guests on the programme, recall conducting research which would inform the decision to move the peg from the Pound Sterling to the US Currency in 1976.
Sir Errol said that while the islands were conducting some business with the United Kingdom at the time, the United States emerged as the region’s main trade partner with significant amount of the small islands’ commerce shifting to the US.
Liburd added that at the time, tourism services also started to play a prominent role in the economies of the islands, with an increase in service payments denominated in the US currency. He said that economic theory suggests that a country should peg its currency to the currency in which most of its trade is conducted, and the fact that more of the region’s trade had shifted from the pound to the sterling, helped to guide the decision to peg the EC dollar to the US dollar.
Sir Errol expressed the view that the stability of the EC dollar after all these years is something of which the people of the region can be proud.
For more information on the history of the EC Currecny, view this week’s episode of ECCB Connects: Click to view