Country Report Curaçao 3rd Quarter 2016

Outlook for 2016-17: Monetary policy

A weak economy and subdued inflationary pressure will enable the CBCS to keep monetary policy very loose. However, monetary transmission mechanisms are weak, and policy rate decisions have only a limited effect on economic performance. Despite a decision in 2011 by the Staten to dissolve the CBCS and establish a central bank solely for Curaçao, reform of the currency union and the creation of a central bank that is independent from Sint Maarten will remain medium-term goals; in view of more pressing issues, they are unlikely to be priorities for the government that takes office after the end-September election. On the banking side, the IMF has urged both islands to strengthen financial supervision and transparency, as well as sharing crossborder tax information, given the island's status as a regional financial centre. This will help to address reputational concerns stemming from high levels of fraud, tax evasion and money-laundering.

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