Philipsburg:--- Commissioner of Finance Xavier Blackman at a press conference on Thursday told reporters that dollarizing St. Maarten would not be in the island's best interest since the monies that are in government coffers would have to be used to buy USD stocks to start off with, something that would run down the new country's foreign reserve. Blackman said while the topic of dollarization has become a debate over the past weeks no one seems to remember what Sir Courtney Blackman said when he gave his lecture here in 2002 at the public forum."To start off with the United States currency St. Maarten would have to invest about 120 million dollars to buy the initial stocks of US dollars while there will be a recurring cost of about 45 million per year which would result in the lost of all profits made by the central bank which is about 33 million dollars." Purchasing US currency he said at a 5% would also cost about 6 million USD and another 6 million is lost interest.
Blackman said the monies that is purchased (initial stock does not bear interest) and for countries that dollarize they end up with a never ending loan at 0% from the US government, owner of the United States Currency. The finance commissioner said these are only some of the financial effects of dollarization.
Blackman said while there will be a new currency the exchange rate would remain the same and people would still be allowed to have their dollars accounts and the ATM will still be distributing dollars. The commissioner said no one would lose financially because the island has not dollarized. Blackman said buying US currency is like buying cars any other products they have to export and people simply would have to pay for it. Important to note is that when becoming a country one has to have its own identity. The commissioner gave examples of the British Territories in the Caribbean whose economies are based on tourism have teamed up and has kept Eastern Caribbean Dollar (EC). He said those islands do not have much of a natural resources yet their currency has remained stable against the US dollars since it was introduced in 1971. Blackman said that based on Sir Courtney Blackman's conclusion dollarization is only for countries that have lost confidence in their capacity to conduct their own affairs. Blackman said over the years St. Maarten was told repeatedly by the Netherlands that they do not believe the island is ready to manage their own affairs. "It was only on Thursday September 9th, ten years after the island voted for separate status St. Maarten managed to fully convince the Netherlands Kingdom partners that they are ready and prepared to move forward. He said giving away ones monetary authority to a foreign nation and having one's own currency is part of national pride.
Dollarize is risky business and it is not something any nation can do from one day to the next.
Blackman said lots of research was done and the decision taken both by St. Maarten and Curacao was to have one common currency. The finance commissioner said even though the Caribbean guilder will be introduced on St. Maarten nothing will change regarding businesses and the tourism economy.
