Worrell Recommends Dollarization

Thanks to fellow blogger at caribbeansignal.com for reminding the BU blogmaster to continue focus on the economy. The controversial former Governor of the Central Bank continues to push a line of argument about the advantages of dollarizing the economy. Discuss for 10 marks

David, blogmaster

DeLisle Worrell: Sovereignty and the US Dollar

Source: DelisleWorrell.com

Reproduced with permission, the full text of Dr. Delisle Worrell – former Governor of the Central Bank of Barbados – July 2019 newsletter – caribbeansignal.com:

The one question which always surfaces in response to my lecture “The time has come to permanently retire all our Caribbean currencies”  – Dr. DeLisle Worrell Says Time to Jettison Caribbean Currencies  – (search for this title on Youtube) is about national sovereignty. Most people seem to believe that sovereignty is “lost” with the retirement of the local currency. On the contrary, replacing domestic currency and deposits with US currency and deposits gives everyone in the country wider access to goods and services. With domestic currency you can buy only local goods and services; with US dollars you can purchase from anywhere in the world, wherever you can get the best value for your money.

The fact of the matter is that the US dollar is sovereign in international transactions, and there is nothing than can be done about that. Even China, the world’s second largest economy, with 15 percent of global GDP to the US’s 24 percent, accepts payments in US dollars. A Jamaican travelling to Haiti, a Guyanese to Suriname, a Dominican to Guadeloupe, a Trinidadian to Barbados, all take US dollars with them. All hotel rates and oil and commodity prices are quoted in US dollars.

Ironically, having a domestic currency in today’s digital world may make a country more susceptible to US sanctions than a fully dollarised country would be. Iran and Cuba, countries which are currently subject to harsh US sanctions, both have domestic currencies. The sanctions are effective because Cubans and Iranians earn in a local currency whose value continues to fall because the country’s access to US dollars is limited.

The US reaps tremendous benefit from the fact that its currency is in universal use. Countries which have their own currencies all maintain a reserve of foreign exchange at their central banks with which to protect the value of domestic money. Those reserves are mostly held in US treasury securities, and constitute a loan to the US Government. However, a country like Panama which has no currency of its own does not have that problem. Such accounts as the Panamanian Government may hold with the US Federal Reserve are solely for the purposes of facilitating payments with foreign countries. Dispensing with an own currency means the government no longer has a reason to make a substantial contribution to the financing of the US Government’s deficit.

The bottom line is that rather than impairing national sovereignty, replacing the domestic currency empowers the country and its citizens by giving access to the world’s goods and services, to the full extent of their incomes. Moreover, the country has no need to offer credit to the world’s wealthiest nation, in order to maintain the value of domestic financial assets.

Source: http://www.DeLisleWorrell.com



  • I am in favour of abolishing import duties in return for massive layoffs in the public sector and the dismantling of social benefits.

    As long as Barbados is a welfare state, people will remain lethargic and unproductive.

    We have 12 years (!) of standstill now. The apologists of the welfare state try to convince us again and again in the forum how needy the poor little civil servants are. They are not defending victims, but perpetrators. They tell us fairy tales because they are afraid of losing social control over the naïve mass of the population.

    We need an economic revolution: the withdrawal of the state from public life, the shrinking of the massively inflated public administration, huge tax cuts and the removal of other investment obstacles.

    We don’t need 30,000 civil servants, we don’t need a Senate, we don’t need a Court of Appeal. We only need 20 MPs and 5 ministers for such a small island.


  • I don’t visit this blog very often, but when I do I’m usually surprised at the number of FALSE statements that go uncorrected.

    Here are a few examples:

    I hope you are aware of what the USD would mean for Barbados. We could only spend as much money on the hungry and helpless mouths of the public service as the tourism industry earns. Since Barbados has been spending more foreign currency than it receives for decades…

    John A
    “living beyond your means” would be a thing of the past.

    Dollarization would effectively reduce the standard of living of Bajans and force them to live within their means which must now be earned and not borrowed.

    Why are all of these statements FALSE?

    Because we Bajans can live above our means as long as foreign investors and lenders are willing to supply us with dollars. If anything, dollarization should increase the capital flows into the island, even if it is only to buy up our real estate. You can run enormous trade deficits if you have large net capital inflows

    Here is another reckless statement:

    ,,,tourism only creates low-paid jobs (so) all investment in higher education has been in vain. Either these graduates go into the public service and become a heavy burden for the taxpayers or they emigrate.

    Here is what I would say to Tron. The main purposes of an education are to enrich an individual’s understanding and mastery of the world he lives in, and to help him realize his talents and potential.

    Boosting the nation’s GDP is not the main goal, but if you were to take that narrow view, I would remind you that REMITTANCES account for at least 20% of Jamaica’s GDP. I don’t know the corresponding figure for Barbados.


  • @EwartArcher

    I can only assume that you clearly did not understand what I said in the context it was said in, so let me try and enlighten you.

    Because we have our own currency we can tamper with money supply locally. Hence we can print money and keep a large civil service employed as was done under the last MOF. We can maintain a standard of living locally based on a false and inflated supply of local dollars, where as if we were tied to the USD we would be forced to adjust our spending to suit our income, as we would be unable to fill a shortfall simply by printing additional U.S dollars.

    What part of that statement is false or too difficult to understand?


  • Archer,

    1) “You can run enormous trade deficits if you have large net capital inflows.”

    IF, IF, IF.

    You should orientate yourself on reality instead of pursuing your daydreams. Show me the international investors who are willing to sink billions of foreign currency into Barbados. The so-called elite of this country has been lying to us for years. They always say “two or three big foreign investments and we are out of the woods”. I’ve heard that at least three times a month since 2008.


    You admit indirectly that we need massive emigration. Very nice. I’ve been preaching this for years. Barbados is overpopulated because there are not enough jobs.

    If you are already here, then please introduce us to your personal plan to solve the permanent structural crisis. We would be very happy!


  • @ John A July 14, 2019 5:12 PM

    Dear John,

    I’d like to sharpen your statement about being tied to the USD, if you don’t mind. We already have a dollar peg. The fact that it is still there is solely because we have declared bankruptcy and refuse to pay billions of US dollars in debt.

    Regardless of the path of national suicide (abandonment of the 1:2 peg, adoption of the US dollar or the like), it remains to be noted that Barbados has been consuming more US dollars for many years than US dollars earned in tourism and offshore finance. The agonizingly long negotiations with the international creditors clearly demonstrate that the international financial community is no longer willing to finance the local Caribbean opera.


  • @ Tron.

    Yes what I speak of is dollarising as opposed to pegging for those that seem unsure of what they read.

    For years we have been chasing too few USD with too many bajan ones and I agree with you that the day of reckoning is now here. As for foreign investors I think if we did dollarise, that would give them the comfort of knowing the fear of devaluation is gone and they would now be able to move capital in and out freely.

    On the foreign debt restructuring I think a statement from the MOF is long overdue on what progress if any has been made.


  • @ Ewart Archer July 14, 2019 4:58 PM
    “Because we Bajans can live above our means as long as foreign investors and lenders are willing to supply us with dollars. If anything, dollarization should increase the capital flows into the island, even if it is only to buy up our real estate. You can run enormous trade deficits if you have large net capital inflows….”

    What is there for rich foreign people to invest in Barbados?

    Which sector is performing or has the potential to attract investment away from Guyana and islands like St. Lucia and Grenada?

    Is it Agriculture without the cultivation of marijuana?
    Is it the manufacturing of substitutes for imported plastics?

    The bottling of piped water to saved millions of dollars in scarce foreign exchange currently spent on the importation of stale water from other countries, including rubbish-laden Trinidad?

    Is it in the massively depressed overpriced real estate market and the knight in forex–earning shining armour the modern-day Massa plantation called the Tourism industry?

    Show us the foreign investors willing to put their money on the last Bajan one-trick pony called the Tourism Industry running on its last legs into the sunset bedraggled with rosettes made of Sargassum seaweed?

    Where can you find those ‘loaded’ investors queuing outside the office of the MoF to offload their money into the ready-done Four Seasons or the flaccid Hyatt imaginary erection so that Bajans can continue to live above their foreign-earning means?

    Get real, Mr. E A, for Barbados is unable to pay its bills (foreign IOUs) after living large for the past 2 decades.

    It’s time for Bajans to settle their tab of sweet life by washing-up the dishes in the kitchen of the god of sacrifice and its appointed overseer the IMF.


  • SirSimpleSimonPresidentForLife

    @fortyacresandamule July 14, 2019 4:30 AM “@simplesimon. There is a saying that a country deserves the leadership it gets. It is the same poor people who continue to elect these visionless politicians time and time again and then expect different result.”

    Perhaps if you had been a patriotic Bajan and offered yourself for elected office, then the people would have chosen to vote for a visionary like you, and not for visionless politicians.

    Step up. Or shut up.


  • SirSimpleSimonPresidentForLife

    @Tron July 14, 2019 10:57 AM “Your civil servants, whom you want to protect, are not victims, but perpetrators. For more than 50 years they have abused the public service as a place to sleep

    @Tron July 14, 2019 10:57 AM “[the civil servants] are to blame for the fact that the Sinckler administration had to print so much money.

    Nonsense. Sinkler and the DLP administration are to blame for their own poor decision making. If you put the blame on the civil servants it seems to me that YOU ARE DEFENDING POLITICIANS.

    There was NOTHING, nothing at all keeping Sinkler and the DLP administration from doing the RIGHT thing.

    And I know for certain that they were receiving excellent advice from excellent civil servants.

    If we think that dollarisation will bring us into the kingdom of heaven we have another think coming.

    As always discipline + hard work are the keys to success.

    Sadly the trouble is that we all want to get rich quick from other people’s labour or by doing virtual work for real dollars.

    Liked by 1 person

  • I want to make a few other points about dollarization.

    Those opposed to it are either card-carrying Marxist-Leninists or West Indian patriots obsessed with promoting and defending the CARICOM project.

    The M-L brigade has a case because, as they have indicated, China, Russia, India and Iran are all developing payment systems that allow them to distance themselves from the dollar. Even the EU is working on alternatives to dollar payments Betting on the dollar could close off some big opportunities.

    But the West Indian patriots have no case. CARICOM is already failing, and the East Indians are about to take over. In Trinidad, the strongest CARICOM economy, the black population is now down to about 36% (per the 2011 census), compared to 47% in 1946, and the PNM is no longer the natural governing party of the country.

    Guyana has discovered over 5 billion barrels of oil, and with a population of less than 800,000, it is expected to become the richest CARICOM state before 2030. In Guyana, the black population is down to 30%, from 38% in 1946.

    Having worked alongside Trinidadian and Guyanese Hindus in Miami, Chicago and Toronto, I confidently predict the implosion of CARICOM. There is no conceivable way the racial conflicts can be contained or resolved.


  • Vincent Codrington

    Discipline and hard work. No magic bullets. No panaceas. Dr. Simple ,go to the top of the class.


  • Barbados is not making the progress envisaged by the change of government.Barbados needs Owen Arthur and his hands on experience in managing this economy.Mistakes are being made that’s impacting the economy.There appears to be wet-behind-the-ears-actors in the Ministry of Finance.We do not want to see another DLP in Bay St.You BLP folk had better get your act together.The grass brown and the horse starving.


  • if we trade BDS$ for USD$ freely, buy getting rid of the BDs$ or removing central bank oversight, then we will have a real problem. imagine that every investment a local person or company made had to compete internationally. local stock exchange vs US stock exchange. local land reducing in value vs land virtually anywhere else. we are a very long way away from competing with anyone for anything. the ONLY reason bajans have any investment money in Barbados is that mostly we don’t have a choice. we are playing the game of monopoly. once the game is over, as it may well be soon, all of the money made is worthless to play poker or any other game. we first have get rid of half of the civil service and everything government owns


  • BA
    July 15, 2019 2:18 AM

    local stock exchange? You ARE joking, right? No Bajan is putting money on that. Looka what Cable and Wireless did to minority shareholders. And what other companies are on it? Three or so?


    Ewart Archer is right. CARICOM is finished. Although I am told that Jamaica is running the T&T business, just as T&T is running Bajan business.

    Guyana wont want nuttin to do wid we.

    But what come round go round…remember when Bajans wanted Guyanese gone? Well, they aint coming back.

    Barbados WILL be using the EC dollar eventually if it does not change to the US.


  • John A for foreign investors I think if we did dollarise, that would give them the comfort of knowing the fear of devaluation is gone and they would now be able to move capital in and out freely.

    Well said!

    The only advantage to having the bajan dollar is that the Central Bank can print money to run the local economy when funds are low.

    However, that is not an advantage as it is effective devaluation of the local currency. That is what was done for the prior eight years.

    By going to US dollar, Barbados also gets rid of the costs for running a currency.


  • What no one has mentioned. What US dollars are actually earned and reported? That must include the US bought on the black market that never reaches the banking system.

    Dollarisation would get rid of the black market where certain people buy US for higher rates than the bank.

    Liked by 1 person

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