ECCB Communications Workshop for ECCU Media Practitioners

Eastern Caribbean Central Bank

Monetary Policy in the Context of the ECCB cont’d • Monetary Policy Tools cont’d

Selective Credit Controls – The Central Bank has the authority to determine the permissible purpose, aggregate ceilings and maximum interest chargeable in respect of loans and overdrafts. The Bank may in consultation with the respective Governments determine priority areas for credit distribution and direct lending to those sectors.

Minimum Savings Rate (MSR) – The MSR was also envisaged as an explicit tool of monetary policy, as set out in Article 34(1) of The Central Bank Agreement Act. In the ECCU, institutional factors such as the lack of financial depth and liquidity of money markets limited the use of market-based instruments to conduct monetary policy. The MSR was introduced to initiate the transmission mechanism between the central bank policy rate and market interest rates, and the ultimate policy goals of employment, output and prices. Another function of the MSR was to serve as a benchmark interest rate, by which market participants can be guided when considering savings, investment and consumption decisions. ‘A CRITICAL REVIEW OF THE MINIMUM SAVINGS RATE AS A MONETARY POLICY TOOL’ ECCB

Transforming The ECCU Together

3/30/2026

12