Abstract
Throughout the past 25 years of turbulence in the international financial system, the countries in the eastern Caribbean have enjoyed remarkable monetary stability. Indeed, the Eastern Caribbean Currency Union and its flagship, the ECCB, provide an impressive example of successful, long-standing monetary cooperation. The monetary and exchange arrangements maintained by the ECCB have served the region well, fostering confidence through stable domestic prices anchored in a peg to the U.S. dollar. The “strong Eastern Caribbean dollar” policy pursued by the ECCB has imposed hard limits on its ability to extend credit to participating governments. As a result, a premium has been placed on fiscal discipline, with most participating governments following prudent fiscal policies.
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