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

43 The new currency The signing of the “Supplementary Agreement” cleared the way for the introduction of the Barbados currency. 27 On December 3, 1973, the Bank issued the $1, $5, and $20 denominations as well as a token issue of coin. The other denominations (the $10 and $100 notes) went into circulation on December 18, 1973. The new coins, in denominations of $1, 25¢, 10¢, 5¢ and 1¢, were introduced on February 4, 1974. 28 ECCA notes and coins ceased to be legal tender in Barbados on February 28, 1974, and April 30, 1974, respectively. FOUNDATIONS OF CENTRAL BANK POLICY The Central Bank of Barbados was established during a period of economic difficulty in Barbados and therefore had little time to find its footing before its ability to help manage the country’s affairs was tested. Economic growth between 1970 and 1973 was interrupted by declines in 1974 and 1975, when rapid increases in crude oil prices precipitated weakness in the major markets for Barbados’ exports. Commenting on the period, Worrell (1982) writes that “… the first half of the decade of the 1970s recorded a poor output performance.” Sugar production fell by a quarter and the growth rates of manufacturing and tourism slowed. According to the retail price index, the costs of housing rose by 75 per cent between 1971 and 1975 and the available evidence suggests that real wages in manufacturing and tourism fell between 1970 and 1975. The balance of payments was in deficit for most of the time until 1973 but surpluses were realised from 1974 onwards. There was also a slowdown in commercial banking activity in the three years ending in 1972. In crafting its monetary policy, the Bank was going into largely uncharted territory and therefore had to tread cautiously. However, it used a combination of traditional and non-traditional approaches to carry out the monetary policy goals outlined in the Central Bank Act. Chapter 2: The Early Years: 1972 - 1975