ECCB
ANNUAL REPORT 2014/2015
10
EASTERN CARIBBEAN CENTRAL BANK
Real GDP in the ECCU is projected to expand by
2.4 per cent in 2015 and 2.5 per cent in 2016. It
is anticipated that the resolution and consolidation
of the banking system and a deepening of the single
financial space will facilitate improvements in both
the transmission of monetary policy and the efficient
utilisation of foreign inflows to the ECCU.
R
eserve
M
anagement
The performance of the Bank’s foreign reserve assets
is dependent on the performance of the US economy
and the US Treasury market. The ECCB foreign
reserve portfolio remained benchmarked against US
Treasuries. The year was characterised by continued
improvement in the US economy especially in the
labour and manufacturing sectors. A dramatic decline
in the price of crude oil spurred a significant decline
in prices and inflation expectations. Shorter-dated
US Treasury yields rose and prices fell as market
participants factored in the sustained improvement
in the US economy amid the end of the US Federal
Reserve’s Quantitative Easing (QE) programme.
However, longer-dated US Treasury yields fell and
prices rose, given the benign inflation outlook.
The ECCB continued to satisfy its reserve
management objectives of preservation of capital and
meeting liquidity needs. The duration of the ECCB’s
customised benchmark was rebalanced to two (2)
years, ensuring that the risk tolerance of the Bank was
preserved. A review of the performance of the Bank’s
global custodian was completed to determine if the
institution continued to meet the required standards in
terms of the asset custody function. The performance
of the custodian was deemed satisfactory and the Bank
decided to retain its services for a further three years.
For the fourth consecutive year, the Bank transferred
funds from the lower yielding liquidity tranche to the
higher yielding core tranche of the foreign reserves
portfolio, as the total foreign reserves liquidity tranche
maintained above-trend balances.
C
urrency
M
anagement
During the period under review, the Currency
Management Department focused on its main
objectives which included:
•
•
Maintaining the integrity of the EC dollar by
ensuring the availability of an adequate supply
of high quality notes and coins;
•
•
Repatriating foreign currency notes in a timely
manner; and
•
•
Facilitating the redemption and issue of EC
notes and coins to commercial banks.
As at 31 March 2015, the value of currency in
circulation was EC$880.17 million. Banknotes
accounted for $787.96 million or 89.53 per cent, while
coins in circulation amounted to $92.21 million or
10.47 per cent. The aggregate currency in circulation
at the end of the financial year reflected an increase of
EC$53.03 million (6.41 per cent) over the total in the
The ECCB continued to satisfy its
reserve management objectives of
preservation of capital and meeting
liquidity needs
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