The history of the Central Bank of Curaçao and Sint Maarten cannot be viewed separately from the history of its islands, and their banking and currency history. From an economic point of view, Curaçao and the other Dutch dependencies, such as Aruba and Bonaire, had no significance at the beginning of the 19th century. Except for products such as salt and wood, the islands were completely dependent on imports. Even the discovery of gold on Aruba was of little significance. The West Indian Company was unable to profit from this discovery in any way.

Curaçao, as an open port, was the meeting place for the exchange of raw materials coming from Latin America and the Caribbean and destined for Europe. The Europeans, on the other hand, traded their products with merchants from Latin America and from Curaçao. As a result, several foreign currencies circulated on the islands. Curaçao operated financially on the basis of Spanish coins, such as the piastre or pillar dollar, and the Portuguese golden Joe, used for large payments. Various small French, German, or Prussian coins circulated as small change. The traders exchanged these foreign gold and silver coins for goods in the so-called trade houses. Because Curaçao’s, imports were greater than its exports, the islands regularly experienced a shortage of money, or rather of coins. To obtain especially small change, the coins were cut into smaller segments for smaller values. In Curaçao the Spanish dollar, also called the pillar dollar, was cut into 4 or 5 segments and stamped with a „star” or the numerals 21. The cut coins, known as Guillotines, were worth fifty cents. Today a shortened version of its name, 'yotin,' refers to a coin worth 50 cents.

Merchants made cunning use of the shortage of coins by speculating. They made and distributed their own value notes in the form of credit notes, which they circulated at high interest. The use of different coins and credit notes resulted in a rather chaotic financial situation in the colony. This situation was a thorn in the flesh for King William 1st, who dreamed of making Curaçao the center for all trade between the Dutch Kingdom and America.

In 1826 the King proposed the establishment of a bank to organize the Colony’s financial affairs. Two years later, on February 6, 1828, the Bank was established. The bank was housed in the Garrison Fort of the West Indian Company, now known as Fort Amsterdam, where the government administration also was located. Three clerks, employees in the General Accounting Department, were appointed for the administration and accounting of the newly established bank. Thus, the Bank became part of the Financial Department as a state bank and did not have an official name.

The objective of the Central Bank of Curaçao and Sint Maarten was to promote trade within the colony of Curaçao by issuing credit to merchants. Furthermore, the Bank acted as a government cashier, making payments to the private sector on behalf of the government.

The Central Bank of Curaçao and Sint Maarten was popularly known as the „Bank van Leening” or „Credit Bank”.

The Bank’s most important objectives are to maintain the external stability of the Netherlands Antillean guilder and to promote the efficient functioning of the financial system in the Countries Curacao and St. Maarten. To realize these objectives, the Bank, as supervisory authority, has frequently recurred to credit control measures and/or to changing the discount rate. The functions of the Bank, explicitly summed up in the Bank Charter, are:

1. the Bank is the only institution entitled by law to issue paper money in the Countries Curacao and St. Maarten. The Central Bank of Curaçao and Sint Maarten also is charged with the circulation of coins;
2. the Bank supervises banking and credit institutions to guarantee depositors and other creditors funds at banking and credit institutions in particular and the soundness of the financial sector in general;
3. the Bank manages the foreign exchange reserves of the Netherlands Antilles, which includes regulating of the transfer of payments between residents and nonresidents of the Countries Curacao and St. Maarten;
4. the Bank acts as the government’s treasurer by receiving and making payments from and to the public through the tax collector’s accounts at the Central Bank;

To strengthen the Central Bank’s independent position vis-à-vis the government, the Bank Charter limits the monetary financing of budget deficits to 10% of the central government’s revenues in the previous year. This limitation must be seen in the context of an overdraft facility to meet liquidity deficits of the public sector that result from seasonal variations in government revenues.

Two of the Bank’s basic tasks are to control the amount of liquid assets in circulation (monetary supervision), and to act as the supervisory body for credit and banking institutions operating in the Countries Curacao and St. Maarten (prudential supervision). Furthermore, the Bank is one of the government’s main advisors on financial and economic affairs.

The monetary policy of the Central Bank of Curaçao and Sint Maarten during the last two decades has been geared toward promoting a stable value of the NAf with respect to the US dollar. Since 1971 the official NAf/$ rate of 1.79 has been firmly supported by the monetary authorities. The Bank’s main reason for pegging the NAf to the US dollar is that over the years, more than 60% of its international trade relations have been conducted with the United States or in US dollars. To maintain the dollar standard, the Bank must ensure a sufficient supply of foreign exchange. To manage the foreign exchange reserves of the Netherlands Antilles, the Bank in the past has exerted control over the credit extended by commercial banks.

The prudential supervision of banking and credit institutions is aimed at controlling the soundness of the financial system in the Countries Curacao and St. Maarten and at safeguarding the deposits of creditors at commercial banks. This supervision is pursued mainly through the Bank’s analysis of the solvency and liquidity development of banking and credit institutions.

Useful links

Currency of the Netherlands Antilles:

Netherlands Antilles guilder

List of Central Banks:

Central Banks

Official website of Central Bank of the Netherlands Antilles:

www.centralbank.an

De Nederlandsche Bank:

www.dnb.nl

Centrale Bank Aruba:

www.cbaruba.org

Central Bureau of Statistics (CBS):

www.central-bureau-of-statistics.an

Chamber of Commerce & Industry:

www.curacao-chamber.an