Friday, May 10, 2013

Pulling Together in the Eastern Caribbean

The Eastern Caribbean Economic and Currency Union (OECS/ECCU) is one of four currency unions in the world. 

As in other parts of the world in the aftermath of the global economic and financial crisis, the region is at a crossroads, facing the major challenges of creating jobs, making growth more inclusive, reforming the banking system, and managing volatility, while grappling with high public debt and persistent low economic growth. Policymakers have the critical task of implementing strong reforms to strengthen the monetary union while also laying the foundation for accelerating growth. 

A new handbook provides a comprehensive analysis of the key issues in the OECS/ECCU, including its organization and economic and financial sector linkages, and provides policy recommendations to foster economic growth.

In an interview with IMF Survey magazine, economist Alfred Schipke, who is one of the authors, points out that, while the recent global financial crisis exposed significant weaknesses in the ECCU, it also provides a unique opportunity to move forward with needed reforms to strengthen the union.

Schipke recently co-edited The Eastern Caribbean Economic and Currency Union: Macroeconomics and Financial Systems, which was launched at IMF Headquarters in Washington, DC. IMF Deputy Managing Director Min Zhu, in his opening remarks, reflected on the challenges facing small island economies, particularly with loss of market share in the tourism industry, the mainstay of the economy in most of the island states. 

He said that the IMF and its partners can do a better job in helping the region to further push macroeconomic, as well as structural, reforms, and noted that the new book would help in providing a framework for developing solutions to the ECCU’s financial sector problems and stimulating economic growth.