The Organisation of Eastern Caribbean States comprises nine countries - Anguilla, Antigua and Barbuda, British Virgin Islands (BVI), the Commonwealth of Dominica, Grenada, Montserrat, Saint Christopher (St Kitts) and Nevis, Saint Lucia and Saint Vincent and the Grenadines. The Eastern Caribbean Dollar is the official currency of eight of these countries commonly described as the members of the Eastern Caribbean Currency Union (ECCU). The BVI is the only OECS country which is not a member of the ECCU.
The OECS countries have a long history of economic collaboration and interdependence. This is rooted in their common goal to succeed though they be small island states, devoid of oil and other natural resources enjoyed by larger Caribbean islands.
Cooperation between these countries started long before the signing of the Treaty of Basseterre in 1981, establishing the OECS.
The demise of the West Indies Federation in 1961, following the withdrawal of Jamaica and the subsequent declaration by Premier Eric Williams of Trinidad and Tobago that “1 from 10 leaves 0”, left the smaller islands with a formidable task of pursuing economic development in a manner that would satisfy the people.
Their response was to pursue joint goals through regional arrangements and institutions, based on the principle that the sum of the whole is greater than its individual parts. The Eastern Caribbean Currency Authority (ECCA) with responsibility for issuing and managing the Eastern Caribbean Currency was one of the institutions that emerged from their collaborative efforts.
Prior to the existence of the EC$, British Caribbean notes and coins constituted the currency in circulation. These were issued by the British Caribbean Currency Board (BCCB), which was established in 1950, and had the sole power to issue currency for its member countries: Barbados, British Guyana, The Leeward Islands, The Windward islands, Trinidad and Tobago.
After Trinidad and Tobago and British Guyana obtained their political independence from the United Kingdom, these two countries elected to withdraw from the BCCB established their respective central banks. Their withdrawal led to the dissolution of the BCCB.
The Eastern Caribbean Currency Authority (ECCA) was established in 1965 with the authority to manage a common currency for Barbados, The Leeward and Windward Islands (and Grenada from 1968). However, in 1974, when Barbados withdrew its membership, ECCA moved its headquarters from Barbados to Saint Christopher (St Kitts) and Nevis.
On 6 October 1965, the Eastern Caribbean Currency made its debut. Initially pegged to the pound sterling, the EC dollar has been pegged to the US dollar at a rate of XCD2.7169 to USD1.00, since 1976. The peg to the region’s main trading partner, the USA, affords stability and confidence in the purchasing power of the EC dollar, which today is one of the strongest currencies in the Caribbean.
On 18 June 1981, the nine small English speaking islands of the Eastern Caribbean continued in a united effort to pursue their joint economic development. With the signing of the Treaty of Basseterre, the member states agreed to collaborate on eighteen main issues. These include:
The ECCB Agreement was signed on 5 July 1983 and the Eastern Caribbean Central Bank (ECCB) came into being on 1 October of the same year. (The BVI is not a signatory to the agreement).
The Bank’s mission is to “maintain the stability of the EC dollar and the integrity of the banking system, in order to facilitate the balanced growth and development of the member states.
The ECCB Agreement mandates the Bank “to actively promote through means consistent with its other objectives the economic development of the territories of the Participating Governments”
In furtherance of this economic development mandate, the Bank focuses on developing regional financial institutions, and promoting the integration of the region’s financial sector to allow for the expansion and efficient transmission of financial services. To this end the ECCB facilitated the development of: