Embark on a Journey through the Eastern Caribbean Dollar (XCD)
The Eastern Caribbean dollar, symbolized as XCD, serves as the cornerstone of eight Caribbean island nations: Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines. Since its inception in 1965, the Eastern Caribbean dollar has undergone significant transformations but remains one of the oldest currencies still in use in the region.
Key Insights into the XCD
- Regional Staple: The XCD is the official currency of the Organisation of the Eastern Caribbean States (OECS), formulated in 1965 to replace the British West Indies dollar.
- Widely Used: It operates across Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines.
- Stable and Pegged: Managed by the Eastern Caribbean Bank, it has been pegged to the US Dollar since 1976.
Understanding the Eastern Caribbean Dollar
The Eastern Caribbean dollar became the official currency for the OECS, a formidable economic and monetary union established in 1981 to harmonize economic and trade policies across the 10 islands of the Eastern Caribbean. Not all member states use the XCD, as Martinique sticks with the euro, while the British Virgin Islands prefer the U.S. dollar.
Upon its introduction, the Eastern Caribbean dollar replaced the British West Indies dollar at a parity. Initially controlled by the Eastern Caribbean Currency Authority, the XCD was pegged to the British pound at a rate of 4.8 XCD to 1 GBP, and later to the U.S. Dollar at a rate of 2.7 XCD to 1 USD in 1976.
Established in 1983, the Eastern Caribbean Bank took over currency issuance, maintaining the U.S. dollar peg to ensure economic stability. The bank’s comprehensive mandate includes managing liquidity among member states, promoting economic development, and maintaining a robust financial framework, all poised to ensure price stability and curb inflation.
Exploring Other Caribbean Currencies
Despite having close geographical ties, many other Caribbean nations use their own unique currencies. For instance, Barbados, a former user of the Eastern Caribbean dollar, switched to its dollar in 1973, pegged at a rate of 2 BBD to 1 USD.
Additionally, the Trinidad and Tobago dollar (TTD), closely aligned with the age of the Eastern Caribbean dollar, initially adhered to a U.S. dollar peg but shifted to a floating rate in 1993. Jamaica’s Jamaican dollars (JMD), managed by the Bank of Jamaica, also float against other currencies, with high inflation causing lower-denomination currencies to phase out.
Even though the Caribbean houses multiple currencies, most tourist spots accept major international currencies like the U.S. dollar, British pound sterling (GBP), and the euro.
Embark on your financial exploration illuminated by these insights into the diverse and vibrant world of the Eastern Caribbean dollar and its neighboring currencies.*
Related Terms: GBP, USD, Barbadian dollar, Trinidad and Tobago dollar, Jamaican dollar, Euro.
References
- Eastern Caribbean Central Bank. “Series 1: 1984”.
- Organisation of the Eastern Caribbean States. “About the OECS”.
- International Monetary Fund. “The Eastern Caribbean Currency Union: Institutions, Performance, and Policy Issues”.
- Easter Caribbean Central Bank. “About the ECCB”.
- Central Bank of Barbados. “The Role of Bank Regulation”.
- Central Bank of Barbados. “Banknotes”.
- Central Bank of Trinidad and Tobago. “Exchange Rate Management”.
