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Caribbean Islands
Index
Banking, Financial Services, and Currency
Financial institutions expanded rapidly as a result of the oilbased liquidity that the financial system experienced in the 1970s.
This was especially true of nonbanking intermediaries, such as
finance houses, which underwent the fastest growth. In the late
1980s, the islands' financial network included the Central Bank,
various government development organizations, commercial banks,
finance companies, mortgage and trust companies, insurance
companies, a stock exchange, and other business services. Although
legislation granted the Central Bank generous control over the
financial system, bank intervention was generally restrained.
Increasing regulation over nonbanking financial institutions was
instituted in the mid-1980s, however, as several poorly managed
finance companies collapsed and were subsequently rescued by the
Central Bank. The sector as a whole contracted after the country's
assets peaked in 1982. Government policies generally favored tight
monetary policies to restrain inflation and help stabilize national
and international accounts during the post-boom adjustment period.
The Central Bank was established in 1964 and was authorized to
issue currency, regulate credit, buy and sell securities and
discount notes, and underwrite government loans. Although the
Central Bank contained about 30 percent of the nation's assets in
1985, its share was declining as international reserves were being
depleted. The government also owned and managed numerous
development finance institutions, most notably the IDC, the
Agricultural Development Bank (ADB), and the Mortgage Finance
Company (MFC). These organizations controlled about 4 percent of
national finances. The IDC, established in 1959, was the most
important development finance organization and was one of the top
lenders to industry. The portfolio of IDC lending generally
reflected government industrialization strategies and also
contained purely government projects. The ADB was the most
important lender to agriculture, especially to the livestock
subsector. Although the MFC was the key lender to the construction
industry, in 1985 the government created the Home Mortgage Bank to
serve as a major institution in the construction industry.
The country had 8 commercial banks with 117 branches, almost
all of which were controlled by Trinidadian and Tobagonian
nationals as prescribed by law. The process of localization of the
islands' banks began in the 1970s, which eventually placed a large
share of Canadian and British banks in the hands of nationals. The
islands' largest bank was the Republic Bank, formerly the British
Barclays Bank. Commercial banks contained 56 percent of the
nation's assets in 1985. Twenty-seven percent of commercial bank
loans went to individuals, primarily for automobiles, followed by
government, particularly public bodies, with 15 percent,
manufacturing 13 percent, distributive trade 12 percent,
construction 8 percent, and the balance to various other services
and productive activities. Interest rates for deposits and loans
averaged 8 and 12 percent, respectively, in the mid-1980s, roughly
comparable with industrial nations and low compared with most
developing countries. Reserve ratios were freely utilized to
control the money supply and credit; in 1985 the cash reserve ratio
was 17 percent, and the liquidity reserve ratio reached upwards of
22 percent. In 1986 the government introduced the Deposit Insurance
Fund, which protected and insured savings up to about US$14,000.
Nonbanking financial institutions, encompassing finance houses,
trust and mortgage companies, insurance companies, and other
business services, have proliferated since the 1970s. These
institutions contained over 10 percent of the country's assets in
1985, trailing the commercial banks and the Central Bank. In the
mid-1980s, there were twenty-two finance companies with some
seventy-six branches. After the 1984 collapse of International
Trust and the faltering of other nonbanking institutions because of
cash flow problems, the Central Bank increased regulation of these
services. As of December 1985, there were fifty-nine insurance
companies registered on the islands, although some of these were
also faltering. There were eight trust and mortgage finance
companies, devoted mostly to real estate. Unlike other Commonwealth
Caribbean countries, financial services in Trinidad and Tobago were
operated predominantly by citizens of that nation, and laws
specified strict limitations on the extent of the participation of
foreigners.
Trinidad and Tobago also operated a small stock exchange, which
was established in 1981. In 1985 nearly 50 million shares of stocks
were sold, involving over 11,000 transactions at a market value of
US$62 million. The exchange's composite index was declining in the
1980s because of the falling value of most stocks and discouraging
economic indicators. The exchange was limited by extensive
government involvement in the economy and the large number of
family-run businesses, which limited the number of companies whose
shares were publicly traded. In addition, few firms sought the sale
of stocks as a viable way to raise capital, instead opting for
commercial bank loans.
In 1964 the Trinidad and Tobago dollar replaced the British
West Indian dollar as the national currency. Eastern Caribbean
dollars--the common currency of members of the Organisation of
Eastern Caribbean States (OECS--see Glossary) and pegged to the
United States dollar at EC$2.70 equals US$1.00--and other
currencies also circulated. From 1972 to 1976, the Trinidad and
Tobago dollar was floated against the British pound sterling; after
1976, however, the Trinidad and Tobago dollar was pegged to the
United States dollar. The first major depreciation of the Trinidad
and Tobago dollar since June 1976 occurred in December 1985, when
the country's currency was devalued 50 percent against the United
States dollar. As a result of the devaluation, the exchange rate
moved from US$1.00 to TT$2.40 to US$1.00 to TT$3.60. This reduced
international reserves but was expected to increase export
competitiveness. Government foreign exchange controls existed,
particularly for foreign travel by nationals.
Data as of November 1987
- Caribbean Islands-Historical Background
- Caribbean Islands-Prosperity and Government Centralization, 1974-81
- Caribbean Islands-Economy
- Caribbean Islands-Agriculture
- Caribbean Islands-Government and Politics
- Caribbean Islands-Tourism
- Caribbean Islands-Political Dynamics
- Caribbean Islands-COUNTRY PROFILE: Turks and Caicos Islands
- Caribbean Islands-Chapter 7 - Strategic and Regional Security Perspectives
- Caribbean Islands-Role of Government
- Caribbean Islands-Labor Force and Industrial Relations
- Caribbean Islands-Role of Government
- Caribbean Islands-Growth and Structure of the Economy
- Caribbean Islands-Political Dynamics
- Caribbean Islands-Economy
- Caribbean Islands-Political Dynamics
- Caribbean Islands-A Regional Security System
- Caribbean Islands-Tourism
- Caribbean Islands-Other Third World Relations
- Caribbean Islands-SOCIAL AND CULTURAL CHARACTERISTICS
- Caribbean Islands-Foreign Relations
- Caribbean Islands-Balance of Payments and Debt
- Caribbean Islands-HEALTH AND WELFARE
- Caribbean Islands-ACKNOWLEDGMENTS
- Caribbean Islands-Role of Government
- Caribbean Islands-FOREIGN RELATIONS
- Caribbean Islands-Education
- Caribbean Islands-Manufacturing
- Caribbean Islands-Relations with the Commonwealth and Others
- Caribbean Islands-Foreign Relations
- Caribbean Islands-COUNTRY PROFILE: St - Christopher and Nevis ST - CHRISTOPHER AND NEVIS
- Caribbean Islands-The Penal System
- Caribbean Islands-The Soviet Presence
- Caribbean Islands-Colonial Heritage HISTORICAL SETTING
- Caribbean Islands-National Security
- Caribbean Islands-COUNTRY PROFILE: Antigua and Barbuda ANTIGUA AND BARBUDA
- Caribbean Islands-The Public Security Forces
- Caribbean Islands-Political Systems
- Caribbean Islands-EDUCATION
- Caribbean Islands-Relations with Latin American and Caribbean Countries
- Caribbean Islands-Changes in the Social Base of Political Power POLITICAL INDEPENDENCE
- Caribbean Islands-POPULATION
- Caribbean Islands-Political Dynamics
- Caribbean Islands-Relations with the United States
- Caribbean Islands-Livestock, Fishing, and Forestry
- Caribbean Islands-National Security
- Caribbean Islands-Population
- Caribbean Islands-Education
- Caribbean Islands-ECONOMY
- Caribbean Islands-Banking and Finance
- Caribbean Islands-Foreign Relations
- Caribbean Islands-Health and Welfare
- Caribbean Islands-Geography
- Caribbean Islands-Population
- Caribbean Islands-NATIONAL SECURITY
- Caribbean Islands-Agricultural Sector
- Caribbean Islands-The Barbados Defence Force
- Caribbean Islands-Government and Politics
- Caribbean Islands-Geography
- Caribbean Islands-Economy
- Caribbean Islands-The Police
- Caribbean Islands-The Robinson Government
- Caribbean Islands-United States Preeminence
- Caribbean Islands-External Sector
- Caribbean Islands-Energy
- Caribbean Islands-Education
- Caribbean Islands-POLITICAL TRADITIONS
- Caribbean Islands-THE STRATEGIC SETTING
- Caribbean Islands-Education
- Caribbean Islands-Role of Government
- Caribbean Islands-Foreign Trade and Balance of Payments
- Caribbean Islands-Geography
- Caribbean Islands-Foreign Trade and Balance of Payments
- Caribbean Islands-Government and Politics
- Caribbean Islands-Livestock, Fishing, and Forestry
- Caribbean Islands-Industrial Sector
- Caribbean Islands-Relations with the Commonwealth and Others
- Caribbean Islands-THE COLONIAL PERIOD
- Caribbean Islands-Political Dynamics
- Caribbean Islands-Relations with Communist Countries
- Caribbean Islands-Role of Government
- Caribbean Islands-GEOGRAPHIC SETTING
- Caribbean Islands-Government and Politics
- Caribbean Islands-Macroeconomic Overview
- Caribbean Islands-Sectoral Performance
- Caribbean Islands-National Security
- Caribbean Islands-Natural Gas
- Caribbean Islands-Geography
- Caribbean Islands-Incidence of Crime
- Caribbean Islands-Economy
- Caribbean Islands-COUNTRY PROFILE: Barbados BARBADOS
- Caribbean Islands-The Road to Independence
- Caribbean Islands-PREFACE
- Caribbean Islands -CHAPTER 3 - TRINIDAD AND TOBAGO
- Caribbean Islands-Services
- Caribbean Islands-National Security
- Caribbean Islands-Foreign Trade and Balance of Payments
- Caribbean Islands-World War II
- Caribbean Islands-External Sector
- Caribbean Islands-EDUCATION
- Caribbean Islands-Foreword
- Caribbean Islands-Health and Welfare
- Caribbean Islands-The Postwar Strategic Vacuum
- Caribbean Islands-Education
- Caribbean Islands-Regional Security Threats, 1970-81
- Caribbean Islands-Controversial Security Issues
- Caribbean Islands-HEALTH AND WELFARE
- Caribbean Islands-Foreign Assistance
- Caribbean Islands-Chapter 4 - The Windward Islands and Barbados
- Caribbean Islands-ECONOMY
- Caribbean Islands-Population
- Caribbean Islands-Political Dynamics
- Caribbean Islands-Foreign Relations
- Caribbean Islands-Foreign Relations
- Caribbean Islands-Banking, Financial Services, and Currency
- Caribbean Islands-HISTORICAL SETTING
- Caribbean Islands-Education SOCIAL AND ECONOMIC DEVELOPMENTS, 1800-1960
- Caribbean Islands-The Post-Williams Era, 1981-86
- Caribbean Islands-The Armed Forces
- Caribbean Islands-Chapter 6 - The Northern Islands
- Caribbean Islands-Relations with the United States
- Caribbean Islands-Sectoral Performance
- Caribbean Islands-Population
- Caribbean Islands-Finance and Banking
- Caribbean Islands-COUNTRY PROFILE: CAYMAN ISLANDS BRITISH DEPENDENCIES: THE CAYMAN ISLANDS AND THE TURKS AND CAICOS ISLANDS
- Caribbean Islands-Political Dynamics
- Caribbean Islands-Services
- Caribbean Islands-Political Dynamics
- Caribbean Islands-Education
- Caribbean Islands-Land Tenure and Use
- Caribbean Islands-COUNTRY PROFILE: MONTSERRAT
- Caribbean Islands-Growth and Structure of the Economy
- Caribbean Islands-Population
- Caribbean Islands-Transportation, Communications, and Electricity
- Caribbean Islands-Health and Welfare
- Caribbean Islands-Government and Politics
- Caribbean Islands-Petroleum and Asphalt
- Caribbean Islands-Economy
- Caribbean Islands-Foreign Relations
- Caribbean Islands-Macroeconomic Overview
- Caribbean Islands-The Pre-European Population HISTORICAL AND CULTURAL SETTING
- Caribbean Islands-Macroeconomic Overview
- Caribbean Islands-National Security
- Caribbean Islands-COUNTRY PROFILE: The Bahamas THE BAHAMAS
- Caribbean Islands-Health and Welfare
- Caribbean Islands
- Caribbean Islands-Crops
- Caribbean Islands-National Income and Public Finance
- Caribbean Islands-COUNTRY PROFILE: Dominica DOMINICA
- Caribbean Islands-National Security
- Caribbean Islands-Population
- Caribbean Islands-Political Dynamics
- Caribbean Islands-Trade and Finance
- Caribbean Islands-Chapter 1 - Regional Overview
- Caribbean Islands-Economy
- Caribbean Islands-Labor Organizations
- Caribbean Islands-Revenues
- Caribbean Islands-THE REGIONAL SECURITY SETTING
- Caribbean Islands-Construction
- Caribbean Islands-Manufacturing
- Caribbean Islands-Agriculture
- Caribbean Islands
- Caribbean Islands-ISLANDS OF THE COMMONWEALTH CARIBBEAN
- Caribbean Islands-Health and Welfare
- Caribbean Islands-Geography
- Caribbean Islands-Political Dynamics
- Caribbean Islands
- Caribbean Islands-Relations with Latin American and Caribbean Countries
- Caribbean Islands-National Security
- Caribbean Islands
- Caribbean Islands-COUNTRY PROFILE: ANGUILLA
- Caribbean Islands-NATIONAL SECURITY
- Caribbean Islands-Economy
- Caribbean Islands-THE EUROPEAN SETTLEMENTS
- Caribbean Islands-Balance of Payments and Debt
- Caribbean Islands-INTRODUCTION
- Caribbean Islands-Foreign Relations
- Caribbean Islands
- Caribbean Islands-Banking and Finance
- Caribbean Islands-Current Strategic Considerations
- Caribbean Islands
- Caribbean Islands-Narcotics Crime
- Caribbean Islands-Economy
- Caribbean Islands-Petrochemicals
- Caribbean Islands-Sectoral Performance
- Caribbean Islands-POPULATION
- Caribbean Islands
- Caribbean Islands-The Post-Emancipation Societies
- Caribbean Islands-The West Indies Federation, 1957-62
- Caribbean Islands-Relations with the United States, Britain, and Canada FOREIGN RELATIONS
- Caribbean Islands-Sectoral Performance
- Caribbean Islands-Health and Welfare
- Caribbean Islands-Geography
- Caribbean Islands-Crops
- Caribbean Islands-National Income and Public Finance
- Caribbean Islands-Sectoral Performance
- Caribbean Islands-Precursors of Independence
- Caribbean Islands
- Caribbean Islands-Education
- Caribbean Islands-The Criminal Justice System
- Caribbean Islands-GEOGRAPHY
- Caribbean Islands-Role of Government
- Caribbean Islands-Banking and Finance
- Caribbean Islands-Economic Policy and Management
- Caribbean Islands-Foreign Trade and Balance of Payments
- Caribbean Islands-Political Unrest and Economic Troubles, 1970-73
- Caribbean Islands-Education
- Caribbean Islands-Labor Force and Industrial Relations
- Caribbean Islands-Chapter 5 - The Leeward Islands
- Caribbean Islands -Chapter 2 - Jamaica
- Caribbean Islands-Health and Welfare
- Caribbean Islands-The Governmental System GOVERNMENT AND POLITICS
- Caribbean Islands-The Sugar Revolutions and Slavery
- Caribbean Islands-Macroeconomic Overview
- Caribbean Islands-The Cuban Presence
- Caribbean Islands-Geography
- Caribbean Islands-Population
- Caribbean Islands-Land Tenure and Use
- Caribbean Islands-Macroeconomic Overview
- Caribbean Islands-Role of Government
- Caribbean Islands
- Caribbean Islands-Government and Politics
- Caribbean Islands-The Governmental System GOVERNMENT AND POLITICS
- Caribbean Islands-Economy
- Caribbean Islands-Industry
- Caribbean Islands
- Caribbean Islands-The Increased Role of the United States
- Caribbean Islands-Population
- Caribbean Islands-Health and Welfare
- Caribbean Islands-Transportation and Communications
- Caribbean Islands-Country profile: Grenada GRENADA
- Caribbean Islands-Iron and Steel
- Caribbean Islands-Geography
- Caribbean Islands
- Caribbean Islands-Banking and Finance
- Caribbean Islands-Postwar Federation Efforts
- Caribbean Islands-Health and Welfare
- Caribbean Islands-Government and Politics
- Caribbean Islands
- Caribbean Islands-Population
- Caribbean Islands-GEOGRAPHY
- Caribbean Islands-Industry
- Caribbean Islands-Consolidation and Economic Hardship, 1962-69
- Caribbean Islands-Patterns of Development
- Caribbean Islands-Geography
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