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

Chapter 1: Background to Establishment 9 The remainder of Hall's report outlined existing currency arrangements, the new Central Bank’s relationships with Government, commercial banks and the ECCA, as well as the responsibilities and arrangements associated with membership in the International Monetary Fund (IMF) and the World Bank. It concluded that there were justifiable reasons for establishing the Central Bank, not the least being the conduct of money and credit policy, building up the monetary system and researching monetary and financial issues. Hall also advised on the logistics of establishing the Central Bank, and touched on the necessary legislation, management, staffing and accommodation, financing, costs and timing. Since the Bank’s functions were somewhat limited, Hall was opposed to the use of the expressions “Central Bank”, “State Bank” or “Reserve Bank” in the title of the institution, proposing instead the “Bank of Barbados”. The recommendations provided for a very strong central bank governor. Hall felt that the office-holder should be an expert in financial affairs, accorded high official status and appointed by “...the highest authority...” The appointment should provide safeguards for security of tenure and against arbitrary variation of remuneration. He recommended that “... the Governor should enjoy a broad measure of executive authority in regard to the day-to-day running of the Bank” (para. 56). Hall was opposed to the creation of a post of deputy governor on the grounds of small size, suggesting instead a managing director. The report allowed for the transfer of staff from central government, particularly in the area of exchange control, and stipulated that the Bank should be wholly-owned by Government. After further consideration of the situation by all interested parties, it was eventually decided that the Bank should have currency-issuing powers. However, these discussions and two other factors hampered speedier progress towards the Bank’s establishment. The Barbados Government first had to withdraw from the ECCA in a way which did not destabilise that institution or the EC currency. Barbados was the major partner in the ECCA, and since there was no specific provision in the Currency Agreement for the withdrawal of any member, a special amendment was required.