The “greenback” is already the accepted currency among Caricom nations, according to former governor of the Central Bank of Barbados DeLisle Worrell.
Worrell believes that these countries should officially adopt the US dollar for everyday transactions, a process known as dollarization, and eliminate their native currencies.
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The nine different currencies used in Caricom, according to Worrell, should be abandoned. These currencies are the Bahamian dollar, the Barbados dollar, the Belizean dollar, the Eastern Caribbean dollar, the Guyanese dollar, the Haitian gourde, the Jamaican dollar, the Trinidad and Tobago dollar, and the Surinamese dollar. Worrell stated in a recent interview with the Jamaica Observer a local Jamaican newspaper.
In response to questions on whether several currencies in Caricom obstruct regional commerce and integration, Worrell told Caribbean Business Report, “I believe that we should get rid of all the local currencies and use the US dollar.”.
Worrell pointed out that US$1.57 billion of Jamaica’s US$4.7 billion in foreign reserves—mostly US Treasury bills—are maintained as foreign security assets, “It doesn’t take anything off of us. In fact, we are harming ourselves by having domestic currencies because to protect the value of the domestic currency, we all have to keep huge amounts of foreign reserves. Those foreign reserves are not available to us to do investments locally. We have to keep them in the US, basically as a loan to the US Government because we have most of them as treasury bills with the US.”
According to Worrell, he is certain that Caricom, the regional commercial bloc consisting of fifteen nations, should adopt the US dollar as its official currency— was the best course of action following the Caribbean nations’ repeated failures to cooperate on topics like a common currency, which would, among other things, facilitate commerce throughout the region. According to Worrell, the Barbados dollar is currently worth less in Jamaica and vice versa, as the Caricom countries trade in US dollars with one another. He continued by noting that, in the Caribbean, a Jamaican who wishes to attend a carnival in Trinidad would not be able to purchase Trinidad and Tobago dollars in Jamaica; instead, he would need to purchase US dollars to use in Trinidad and Tobago.
“We have to accept the reality and the reality is that the US dollar is the common currency. And I would go so far now as to say, having had the experience over many decades of failure, to have a common currency amongst ourselves, we have to accept the reality that the US dollar is the common currency.”
He made the point that Caribbean nations, such as his own Barbados, whose currency is linked to the US dollar at a rate of BB$2 to US$1, must locate sizable foreign reserves to maintain it, wasting resources that could be used to further the development of the nation instead. He refuted claims that each nation would lose authority over its monetary policy if Caricom accepted the US dollar as its official currency.
“The truth of the matter is, none of our countries have [an] independent monetary policy because everything we produce or consume has an import element. And the only thing we can do is to make sure we don’t aggravate the import price by devaluing our currency. And that’s why I am saying, we pay a high price to protect the currency because the scarce US dollars that we have, we take a big chunk of it and we lend it back to the US, just to protect the value of our currency. Panama doesn’t have to do that,” he added.
In 1904, Panama made the US dollar its official currency. In September 2000, Ecuador became a dollarized nation; El Salvador did the same in January 2001. Javier Milei, the recently elected president of Argentina, has promised to do away with the central bank and dollarize the nation’s economy. The goal of dollarization for countries contemplating it is to promote economic development and stability by doing away with their currencies and substituting the US dollar.
According to Worrell, if Caricom decides to make the US dollar the official currency, the central banks of each member nation would utilize a portion of the foreign reserves kept at the Federal Reserve to redeem all local currency holdings before depositing US dollars equal to that amount into individual bank accounts. According to him, if the nations dollarize, they would have to maintain less foreign reserves with the US than they do currently to conduct daily business.
