ECCB Communications Workshop for ECCU Media Practitioners

Eastern Caribbean Central Bank Monetary Policy in the Context of the ECCB cont’d • The principle here is that with a number of countries putting in and taking out foreign currency at different times there is a backing factor.

• The justification for entering into such an arrangement is that given the structure of the ECCU economies, small open economies (physical size, economy, population) with narrow resource bases (few productive sectors), it is beneficial for the region to peg to its major trading partner. Why?

• Since the level/strength of a country’s currency (domestic/local) is largely dependent on the demand for that currency it would be difficult for ECCU countries to maintain stable currencies given the very limited range of products that the region makes to sell to the rest of the world. So the demand simply would not be there for the domestic currency of the countries of the ECCU in the absence of the peg as countries purchase goods and services from countries in their domestic currency.

Transforming The ECCU Together

3/30/2026

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