Eastern Caribbean Central Bank (ECCB) Agreement: A Summary of Parts VI and VII

The Eastern Caribbean Central Bank (ECCB) is a crucial institution in the region, providing various services to its member countries. This article will summarize two key parts of the ECCB Agreement: Part VI - External Reserve and Part VII - Foreign Exchange Operations.

Part VI: External Reserve

Purpose and Composition

The ECCB shall maintain an external reserve consisting of:

• Gold
• Foreign exchange
• Internationally recognized reserve assets
• Bills of exchange
• Treasury bills
• Securities issued or guaranteed by foreign governments or international institutions

Requirements and Management

The external reserve must be at least 60% of the value of currency in circulation and other demand liabilities, excluding commemorative coins. However, the Board may change this percentage requirement with unanimous agreement from all Council members.

If the external reserve declines, the ECCB shall report to the Council on the situation and recommend measures to address it.

Part VII: Foreign Exchange Operations

Depository Services

The ECCB shall be the depository of external assets of Participating Governments. These governments may designate agents and correspondents to hold these assets.

In addition, the ECCB may serve as a depository for:

• Boards
• Agencies
• Social security funds
• Other statutory bodies of Participating Governments

Foreign Exchange Operations

The ECCB may engage in various foreign exchange operations, including:

• Buying or selling gold coins, bullion, or other precious metals
• Using banking instruments to buy, sell, or deal in foreign exchange
• Opening and maintaining accounts abroad
• Acting as an agent or correspondent for:
  • Foreign central banks
  • Financial institutions
  • Governments
  • Agencies
  • International financial institutions