Law joint Central Bank to review advisory committee

The law that regulates the bank statute for the collective Central Bank of the future countries Curaçao and St. Maarten was recently forwarded to the review advisory committee.

Curaçao Commissioner of Finance Mike Willem is hoping for a quick response on whether adjustments are required.

The political establishment of the two current Island Territories had already decided in 2006 that there would be a joint Central Bank for the countries Curaçao and St. Maarten with a common currency once the Netherlands Antilles ceases to exist.

"This was determined in the Final Declaration of November 2, 2006. All discussions on this matter are closed," said Willem.

Time is short, with only four months to go for the agreed upon date of October 10, 2010 when Curaçao and St. Maarten will acquire the status of country. As yet, there is no name for the joint Central Bank, or for the new currency that is to replace the Antillean guilder.

In view of this, a transition period may be necessary so that the Antillean guilder remains in effect until the new shared bank and currency have been regulated accordingly.

Willem: "It was also decided there will be a transition period for the Social Insurance Bank SVB. St. Maarten indicated it wanted its own health insurance. However, it will not accomplish this on time.

"For that reason, it was decided that SVB on Curaçao would continue to process everything for the islands during a transition period. We know of more matters that will not be ready on time and for which a transition period is being discussed."

The Business Association Curaçao VBC said its does not attest to a good and thorough preparation "that one still does not know what the new currency will be, what the joint Central Bank will be called, what the value of this currency will be, or what it looks like four months before Curaçao is to acquire the status of country."

The association wrote this in its recent newsletter. VBC said "although apparently few activities have been carried out regarding concrete interpretation of the draft monetary union, this creates possibilities to give a positive turn to this process."

According to VBC, from practice it appears that a monetary union will not work without an economic and political union, and will lead to substantial instability. In this, the association referred to the developments regarding the euro. "Could this progressive insight not lead to revision of the concluded decision in 2006 regarding a monetary union?"

Willem said it's not an option to spend more time on discussions whether dollarization and a joint Central Bank will be realised or not. "We must concentrate on October 10. At this stage, we are not going to deviate from concluded agreements as this will only lead to even more difficulties in view of October 10."

In the Final Declaration, it was concluded that there would be a monetary union between Curaçao and St. Maarten, but no political and economical union. That this model had caused problems in Europe as a result of which the euro is now under pressure, is no reason for Willem to abandon the concluded agreements.

"We should rather consider what additional measures are required to prevent us from experiencing the same situation as in Europe."

St. Maarten had essentially opted for its own Central Bank upon acquiring country status, as the island in the constellation of the Netherlands Antilles could not contract any loans. Nevertheless, this did occur via government-owned companies and institutions.

However, during the consultations in the "Spaanse Hof" in The Hague in 2006, it was agreed there would be a monetary union between the new countries within the Dutch Kingdom Curaçao and St. Maarten, with a joint Central Bank that supervises such. This means agreements are also necessary between Curaçao and St. Maarten on the conditions under which the government may contract loans in the two countries.

4 June 2010

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