Opinion: DollarizationPOSTED: 03/30/15 12:51 PM
The council of advice organizes a seminar about dollarization tonight at the university on Pond Island. It is an issue that comes and goes. Discussions about dollarization go back years and the opinions about the pros and cons are divided. One thing remains a constant: nobody is taking a decision and that creates the impression that St. Maarten is okay with the Antillean guilders on the one hand and the American dollar on the other. This is what we wrote about the subject almost four years ago and we present it here as a warmup for tonight’s seminar.
We have long wondered about the pros and cons of dollarization for St. Maarten. The result of that exercise is rather confusing, because it turns out that the experts do not agree on the main question: to dollarize or not to dollarize?
One would think that the opinion of someone like dr. Emsley Tromp, the former president of the Bank of the Netherlands Antilles who now works in the same function for the Central Bank of Curacao and St. Maarten, would be enough to get everybody on the same page.
That is not the case. Tromp favors dollarization in spite of the disadvantages that he has acknowledged. But last year General Affairs Commissioner Zita Jesus-Leito announced the introduction of the Caribbean guilder as the joint currency for St. Maarten and Curacao.
Now we have a joint Central Bank that obviously feels no need for two, official currencies, but in St. Maarten there is apparently a renewed interest in a discussion about dollarization. It’s a case of too little, too late.
If St. Maarten gets it in its head to turn around and drop the Caribbean guilder in favor of the American greenback, the country does not need a Central Bank anymore, Tromp has pointed out. If St. Maarten pulls out of the Central Bank – if that is possible at all – Curacao is left with a problem it did not ask for. It will have a Central Bank, but one that will be unable to support itself. It will become dependent on government financing, which in turn affects the Bank’s sacred independence.
The man on the street, to use a politically incorrect expression, will probably scratch his head wondering what all the fuss is about. Checking his pockets he will find mostly American dollars there, so for all he knows, he has been dollarized for the better part of his life.
St. Maarten is now embarking on a discussion it should have held something like two years ago, when some options were still open. But our politicians have let that opportunity slip away, and now the matter is in the hands of our rookie-parliament.
What other options will come on the table? In the past there has even been a suggestion to switch not to the American dollar but to its Eastern Caribbean little brother. That will certainly not happen, and we think it is also too late for an official switch to Uncle Sam’s greenback.
Unofficially though, the American dollar will remain a fixture in St. Maarten, while that new currency, the Caribbean guilder, may be upon us– we estimate – no faster that in a couple of years, pegged to the dollar like its Antillean predecessor. So when everything is said and done, nothing will change, except the name on the banknotes. For many people, that’s a comforting thought.