The Takeaway: Is the Eastern Caribbean legal framework preventing a trade opportunity in complimentary currency?
Fractional reserve banking is the milk of the poppy that even Caribbean central banks may not be able to shake (Sorry. I have been reading A Game of Thrones). This thought popped into my mind while listening to a webinar presented by the Caribbean Telecommunications Union. The webinar addressed the use of complementary currencies. Investopedia, a financial news site, provides a working definition:
“A complementary currency is any currency or exchange medium that is not a national currency but is accepted for use under specific conditions in a nation. A complementary currency is not intended to be used as the primary means of exchange in an economy; it is set up by private citizens, advocacy groups, or public regulatory bodies to create parallel markets for specific goods and services or within a specific geographic region.
The goal of a complementary currency is to regulate a local or regional economy or achieve a particular social, environmental, or political purpose.” — Investopedia.
Gianluca Dettori, partner and chairman at Primo Capital, discussed the complementary currency called Sardex. Sardex was started on the island of Sardinia in 2010 for the purpose of identifying value generated by small and medium sized businesses and providing a currency that facilitates the transfer of identified value.
Mr. Dettori described Sardex as a unitary trading system where one unit of SARDEX is equal to one euro. Mr. Dettori pointed out that Sardex can be likened to a stable coin where the complementary currency is tethered to the euro’s value. For example, if a casket of wine is 50 euros, the price in terms of Sardex is equal to 50 units of the complementary currency.
Dr. Jan Schroder presented on the complementary currency CaribCoin (Carib$). Like Sardex, Carib$ lives alongside fiat national currencies. It works only in the Caricom region, and not only is its value pegged to national currencies, unlike Sardex, Carib$ can be exchanged for a national currency.
I could not conclude from a review of the Eastern Caribbean Central Bank’s legal framework that the use of complementary currencies was banned from use in Eastern Caribbean jurisdictions. Both Mr. Dettori and Dr. Schroder emphasized how complementary currencies focused on facilitating the exchange of value derived from production. Whether use of complementary currencies could be likened to putting the horse before carrot is a discussion best left to policy makers.
I do agree with Sabato Caesar, minister of agriculture for St. Vincent and the Grenadines, that there should be a primary focus on the movement of commodities because what good is the value of a currency, fiat, national, or complementary, if you cannot increase production of underlying commodities. A currency is just a measure or account for the value of a nation’s underlying production.
While I concluded that the legal framework does not appear to ban the use of complementary currencies, investors and traders from the outside looking in at the Caribbean should consider the scale of production and internal and external trade when assessing the potential of complementary currency use in the Eastern Caribbean.
Alton Drew
21 March 2025
The Data.
Foreign exchange per the Board of Governors of the Federal Reserve System.
EUR/USD=1.0872
GBP/USD=1.2917
USD/JPY=148.5100
Administered rates per the Board of Governors of the Federal Reserve System.
Discount Window: 4.50%
Effective Federal Funds Rate: 4.33%
Interest on Reserve Balances: 4.40%
Overnight Reverse Repurchase Facility Rate:4.25%
Reference Rates per the Federal Reserve Bank of New York.
Effective Federal Funds Rate:4.33%
Overnight Bank Funding Rate: 4.33%
Secured Overnight Financing Rate:4.29%
Broad General Collateral Rate:4.28%
Tri-Party General Collateral Rate:4.28%
U.S. Treasury rates per the Department of the Treasury.
2-yr notes: 3.94%
10-yr notes: 4.25%
Foreign exchange per the Eastern Caribbean Central Bank.
USD/XCD=2.70
GBP/XCD=3.49394
EUR/XCD=2.92586
CAD/XCD=1.88422
JPY/XCD=0.01807
KWD/XCD=8.76339
AED/XCD=0.73511
NGN/XCD=0.00176
CNH/XCD=0.37241
Administered rates per the Eastern Caribbean Central Bank
ECCB Discount Rate: 3.0%
ECCB Call Rate: 2.4%
ECCB Fixed Deposit Rate (one month): 2.8%
St. Kitts & Nevis Sovereign Debt Rates
45-year Government Bond: 1.50%.
20-year Government Bond: 3.00%
DISCLAIMER: I am not a financial adviser. These blog posts are for educational purposes only. Investing of any kind involves risk. Your investment and other financial decisions are solely your responsibility. It is imperative that you conduct your own research and seek professional advice as necessary. I am merely sharing my opinions.
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