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What does ECCB see as its role in the social
development of the member countries?
Governor’s Response:
“At the end of the day, economic activity affects people
personally, you are employed, you have a good income, inflation
does not eat into your income, there is a strong currency
so that you are able to have good purchasing power. You can
contrast this with other countries where there has been steep
devaluation and rates of inflation are high. So in what we
do as the central bank; keep the currency stable, keep inflation
low, keep the financial system stable, those are tremendous
contributions to the social good. You do not want to be in
a place where the banking system is falling apart, you do
not want to be in a place where the currency devalues in front
of your eyes, you do not want to be in a place where inflation
is 100%.
Economic development is a straight and narrow path. For those
countries that have come off that path it is extremely difficult
to get back on. What we have been able to do in the OECS is
keep the currency stable, keep inflation low, keep the banking
system stable. These things are fundamental. So let us not
get off that path, it is extremely difficult to get back on
and then there is the social chaos that comes….. Good
economic policies and stable conditions protect the poor and
then you build on that.”
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As we seek to protect the stability of the EC dollar
and by extension its internal value, which economy or economic
circumstances cause you the greatest concern and why?
Governor’s Response:
"There are two major concerns; one internal and one external.
The internal has to do with fiscal policies. We have to be
very efficient with respect to our revenue arrangements, particularly
in light of the changing circumstances, where with new trade
regimes, we are going to have to forego revenues from import
duties and replace them with other kinds of revenues. On the
expenditure side, we have to look at the size of government
and ask two fundamental questions: What is the purpose of
government and what should governments do? …….
"In terms of the private sector, we will also have to
have firms that can compete in this new environment. We have
to consider what things we can identify both in services and
in commodities where we have some competitive advantage and
can press home that competitive advantage…. “
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What are the key policies that you would wish to see
implemented by member governments which will assist the Central
Bank in meeting its dual objectives of maintaining the stability
of the exchange rate and facilitating the process of economic
development of the member territories? Consider also the possible
conflict of the aims of these policies where one focuses on
credit restrain while the other on credit expansion.
Governor’s Response:
"With respect to the policies, one can be fairly clear
about these. Our countries need to run good fiscal policies
for credibility…Once the countries start getting surpluses
on their current account, once they have good public investment
programmes, that gives the sort of credibility that is needed
to proceed."
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