THE former governor of the Central Bank of Barbados DeLisle Worrell has said Caricom countries should formally adopt the US dollar for everyday transactions, a process called dollarisation, and do away with their local currencies, arguing that the “greenback” is already the common currency in the region.

Worrell made the call in an interview with the Jamaica Observer recently, saying the move should be embraced instead of using nine different currencies in Caricom — 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 — none of which, he argues, has any value outside of their borders.

“I believe that we should get rid of all the local currencies and use the US dollar,” Worrell told Caribbean Business Report as he responded to queries about whether regional trade and integration are impeded by muliple currencies in Caricom.

“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,” he pointed out. Jamaica, for example, has foreign reserves amounting to US$4.7 billion with US$1.57 billion of the amount held as foreign security assets, chiefly US treasury bills.

Worrell said he was convinced that adopting the US dollar as the official currency in Caricom — the regional trading bloc made up of 15 countries — was the way to go after seeing failures over the years of Caribbean governments to work together on certain issues such as a common currency which would, amongst other things, make trade easier in the region. Currently, Caricom countries trade in US dollars amongst each other with the Barbados dollar, for example, having little value in Jamaica and vice versa, Worrell stated. He added that in the Caribbean, even if a Jamaican wants to go to Carnival in Trinidad, there is no market for him to acquire Trinidad and Tobago dollars in Jamaica, saying that person would have to acquire US dollars for 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 pointed out that countries in the Caribbean, like his own, Barbados, which has pegged the value of its currency to the US dollar at a rate of BB$2 to US$1, has to find substantial foreign reserves to maintain it, using resources that could be deployed otherwise to help develop the country. And he swatted away arguments that if the US dollar is adopted by Caricom as the official currency, each country would lose control over their own monetary policy.

“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 continued.

Panama adopted the US dollar as its official currency in 1904. Ecuador dollarised in September 2000 and El Salvador followed suit in January 2001. Recently-elected Argentinian president Javier Milei has pledged to dollarise his country’s economy and abolish its central bank. By eliminating their national currencies and replacing them with the US dollar, countries considering dollarisation hope to achieve economic stability and growth.

He said if Caricom moves to adopt the US dollar as the official currency, each country’s central bank could use a portion of the foreign reserves that are held at the Federal Reserve to redeem all local currency holdings, then deposit US dollar of equivalent value in people’s bank account. He said if the countries dollarise, then they would be required to hold a smaller balance than is now held as foreign reserves with the US to facilitate normal transactions.

WORRELL…I believe that we should get rid of all the local currencies and use the US dollar