Both Sides of The Coin: The Story of The Central Bank of Barbados 1972-2017

139 were incompatible with globalisation and trade liberalisation. In essence, there was a view in the Bank, and in the country generally, that some liberalisation of exchange controls could help to stimulate the economy. The first phase of liberalisation The first changes in the system came in 1988 when authority to release foreign exchange for education, business and holiday travel, as well as advance payments for imports, was delegated to the commercial banks. However, the view that exchange controls were inefficient gained momentum during the 1991-93 economic downturn when structural impediments to investment and growth were being identified. Commercial banks were permitted higher limits for transactions already delegated, allowed to approve remittances for medical payments abroad and open foreign currency accounts for enterprises operating in Barbados. During the next four years the liberalisation process was applied to a wide range of current account transactions. The first liberalisation of the capital account took place in 1998 when the banks were allowed to authorise the transfer of funds in EC dollars for investment in the OECS countries. No liberalisations took place during 1999 and 2000 when a strategic evaluation of the exchange control regime was undertaken. This helped to determine those transactions which could be delegated to commercial banks without undue risk to the foreign exchange reserves. Satisfying regional commitments There was a wide range of delegations between 2003 and 2006 reflecting mainly the need to satisfy commitments under the Caricom Single Market and Economy (CSME). The affected transactions included applications to transfer funds to Caricom countries on almost all remaining current items, investments in corporate equities cross-listed on Caricom stock exchanges, the transfer of funds to Caricom countries in respect of Chapter 4: Maturity, Modernisation and Issues of Governance: 1987 and Beyond