PHILIPSBURG, WILLEMSTAD - In a recent statement, outgoing Finance Minister Marinka Gumbs of Sint Maarten elaborated on what constitutes a "monetary union" and assessed the current status of the monetary union between Sint Maarten and Curaçao. The discussion highlighted the Ennia case as a test of the union's effectiveness and future prospects.
Gumbs described a monetary union as a "pragmatic marriage," where the benefits for each member should outweigh the disadvantages. This was the arrangement the governments of Curaçao and Sint Maarten entered into on October 10, 2010, following the dissolution of the Netherlands Antilles.
Looking ahead to the anticipated introduction of the Caribbean guilder in 2025, Gumbs views this as an opportunity to evaluate whether the union is indeed beneficial for both parties and functioning as intended.
The evaluation will be conducted step-by-step based on several criteria. Firstly, Gumbs noted that monetary unions are supposed to eliminate uncertainties regarding exchange rates and currency conversion costs while reducing transaction fees. "I believe our current union achieves this," she said.
Additionally, a monetary union should facilitate easy and transparent business transactions through a common currency. Gumbs expressed uncertainty about the extent to which this has been accomplished but acknowledged that there may be positive aspects to assess.
Moreover, Gumbs pointed out that a monetary union is expected to adhere to standard budgetary rules and policy coordination, a responsibility she has delegated to the Central Bank for evaluation.
Other advantages of a monetary union include streamlining cross-border transactions, enhancing price transparency, and promoting healthy market competition, potentially leading to more affordable goods for consumers. However, Gumbs admitted uncertainty about how to measure these benefits within the current union.
Lastly, Gumbs emphasized that a monetary union should boost trade between member states. "How we are performing in this area is for you to decide," she told the audience.
Gumbs underscored that for any union to succeed, it requires "love, respect, commitment, communication, and joint effort." She stressed that neither the size of the partners nor their financial resources should be a determinant of success.
The minister has long pondered whether the union between Curaçao and Sint Maarten meets these standards. She questioned whether both parties agreed to support each other through good and bad times and what promises were made when the union was formed.
Recent developments, particularly the Ennia case, have tested the core of their relationship. Gumbs expressed satisfaction with the collaborative effort to address issues in the Framework Agreement with mutual respect, dedication, honest communication, and, she added, even love.
Gumbs also acknowledged that "no marriage is perfect." As Sint Maarten prepares for the introduction of the Caribbean guilder, it faces significant challenges. Sint Maarten operates as a dollar economy, a fact recognized since the days of the former Netherlands Antilles, and this will not change with the new currency.
Additionally, Sint Maarten is in a symbiotic and borderless union with French St. Martin, where the euro is the official currency and the dollar is widely accepted. However, the Caribbean guilder will not be legal tender on the French side. "In summary, on this 37-square-mile island, three currencies will circulate: the dollar, the euro, and the new Caribbean guilder. We need to address this carefully for trade and economic development," Gumbs concluded.