What is the XCD (Eastern Caribbean Dollar)
XCD (Eastern Caribbean Dollar) is the official currency for eight countries: Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines.
BREAKING DOWN XCD (Eastern Caribbean Dollar)
The XCD (Eastern Caribbean Dollar) is subdivided into 100 cents and has existed since 1965, when it supplanted the British West Indies dollar. This makes it among the oldest currencies in the region. The currency serves the Organisation of the Eastern Caribbean States (OECS), an economic union established to harmonize economic and trade policies among the 10 islands encompassed by its members. Only eight of the participating countries use the XCD, however. Martinique remains affiliated with France and therefore uses the euro, while the British Virgin Islands use the U.S. dollar.
At its establishment, the Eastern Caribbean dollar replaced the British West Indies dollar at par. The Eastern Caribbean Currency Authority controlled the issuance of the Eastern Caribbean dollar and pegged its value at 4.8 XCD to 1 GBP. In 1976, the currency authority repegged the Eastern Caribbean dollar to the U.S. dollar at a rate of 2.7 XCD to 1 U.S. dollar. The Eastern Caribbean Bank, established in 1983, subsequently took over the issuance of the currency, leaving the U.S. dollar peg in place.
The Eastern Caribbean Bank’s mandate covers regulation of liquidity throughout its member states, as well as the promotion of economic and monetary stability through support of economic development and maintenance of a sound financial structure. The bank sees its dollar peg as a primary means to maintain price stability throughout the region and keep inflation in check.
Other Caribbean Currencies
Despite their small size and relative proximity to one another, many Caribbean nations use different currencies. Barbados, which at one time used the Eastern Caribbean dollar, switched to its own dollar in 1973, pegged with the U.S. dollar at a rate of 2 Barbadian dollars to 1 U.S. dollar. The Trinidad and Tobago dollar, approximately the same age as the Eastern Caribbean dollar, began with a U.S. dollar peg and eventually moved to a floating rate in 1993. Likewise, Jamaican dollars, used on the island of Jamaica and issued by the Bank of Jamaica, float against other currencies. High inflation has led to a de facto phaseout of lower-denomination currencies in the country.
Despite the proliferation of various currencies throughout the region, most tourist destinations accept payment in major global currencies including the U.S. dollar (USD), British pound sterling (GBP) and the euro (EU).