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

Chapter 1: Background to Establishment 5 the British Caribbean Currency Board (BCCB) was formed in 1951, with headquarters in Trinidad and Tobago. The BCCB comprised six members appointed by the secretary of state for the colonies, with one member each being nominated by the five governors of the territories in question. There was also an executive commissioner, appointed by the secretary of state. The BCCB was given the sole right to issue currency in Barbados, British Guiana, the Leeward and Windward Islands and Trinidad and Tobago. The formation of the BCCB brought the West Indian colonies into the sterling exchange system with adherence to a common sterling exchange standard. The BCCB dollar was to be equivalent to four shillings and two pence sterling. The first note - the $1 denomination - was issued in December 1954 and the coins on November 15, 1955. Meantime, another milestone in the history of currency in Barbados had been reached on January 1, 1949 when dollars and cents were used for the first time in the island. For some two hundred years after settlement the populace had counted in pounds, shillings and pence while using gold coins, silver dollars and other currency as their media of exchange. From the mid-1800s, UK coins became the currency of the island while the dollar was the unit of account. Therefore the change in 1949 meant that at long last Barbados had a medium of exchange which was identical to the standard of value used for monetary calculations. The advent of the BCCB did not materially improve the currency arrangements in the region. The new institution was merely a money-changer and lacked discretionary power with respect to the issuing and redemption of currency. For example, it had to maintain reserves equivalent to the value of currency in circulation. Moreover, these funds had to be invested in British Empire sterling securities and a portion had to be kept in liquid form. 6 The BCCB was also a passive body which could not influence the activities of the commercial banks that dominated the financial system. (See McClean [1975, p.2] for a discussion).