A Currency Union for the Caribbean

Author/Editor:

Rupert D Worrell

Publication Date:

February 1, 2003

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

The experiences of Caribbean Economic Community countries show that exchange rate depreciation in these countries is inflationary, and that, while changes in the relative prices of tradables may affect exports, tourism, and imports, nominal exchange rate changes have no predictable effect on those relative prices. Under these circumstances, economic literature indicates that a fixed exchange rate regime is optimal, and Caribbean countries with (quasi-) currency boards have been successful in maintaining durable exchange rate pegs. Commitment to a currency board is a potentially vital step in achieving a currency union for the Caribbean.

Series:

Working Paper No. 2003/035

Subject:

Currencies Economic integration Exchange rate adjustments Exchange rates Foreign exchange Monetary unions Money

English

Publication Date:

February 1, 2003

ISBN/ISSN:

9781451845372/1018-5941

Stock No:

WPIEA0352003

Pages:

35

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