Government of Curaçao says CBCS structure has become untenable

WILLEMSTAD--The Government of Curaçao on Monday stated that the ongoing structural blockage in forming a well-functioning Supervisory Board for the Central Bank of Curaçao and St. Maarten (CBCS), along with the resulting administrative and political deadlocks, has become a serious obstacle to the effective functioning of the central bank as a whole.

According to the government, the current situation is untenable. Curaçao emphasized that it represents approximately 80 percent of the economic interest in the CBCS and carries by far the largest share in the financial sector supervised by the central bank within the monetary union. As such, the government said Curaçao bears a special responsibility for the stability and proper functioning of the CBCS as monetary authority and prudential supervisor of the financial sector.

The Government of Curaçao further concluded that the joint central bank arrangement between Curaçao and St. Maarten, established after the dissolution of the Netherlands Antilles, has proven to be an unsuccessful form of cooperation imposed within the Kingdom since 10-10-10.

The statement was issued in response to recent media reports on discussions held during the Meeting of Beneficiaries of the CBCS on February 26, as well as public comments made by St. Maarten Minister of Finance Marinka Gumbs on March 3. The Government of Curaçao said it considered it necessary to provide the public with what it described as the correct information in order to prevent false impressions from taking hold in the media.

According to Curaçao, Minister Gumbs has, since last year, sought to have a representative from St. Maarten appointed as chairman of the CBCS Supervisory Board. However, the government noted that such an appointment cannot be made unilaterally and depends first on a recommendation from the Supervisory Board itself, after which the governments of Curaçao and St. Maarten may take a decision.

The Government of Curaçao stated that during the February 26 Meeting of Beneficiaries, where it was represented by Minister of Finance Charles Cooper, Minister Gumbs requested that the chairmanship of the Supervisory Board be granted to St. Maarten in the next round of appointments. In support of that request, she reportedly indicated that an agreement had been made with former Curaçao Minister of Finance Javier Silvania that the chairmanship would be transferred in writing. Curaçao said no such written agreement has been recorded and added that former Minister Silvania has stated that no such agreement existed during his tenure.

Curaçao also made clear that it does not consider it acceptable for St. Maarten, as the smaller shareholder with an approximate 20 percent interest in the CBCS, to hold the chairmanship while also appointing half of the supervisory directors. According to the government, such an arrangement would run counter to Curaçao’s economic stake and create an imbalance in governance.

The government further argued that St. Maarten is already overrepresented on the Supervisory Board because of its right to appoint half of the ordinary supervisory directors and because its consent is required for the appointment of a chairman. Curaçao said this structure has repeatedly led to deadlocks between the two countries on board appointments. As a result, it noted, many board members have ultimately been appointed not by the governments themselves but by the President of the Common Court of Justice, in accordance with Article 10-10.

Despite its criticism of the current arrangement, the Government of Curaçao said the dispute does not currently threaten the administrative structure of cooperation between the countries, nor does it undermine the stability of the Caribbean guilder or the continuity and effectiveness of the supervision carried out by the CBCS. It stressed, however, that the governance impasse remains a serious matter that requires attention.

The Government of Curaçao said it will soon enter consultations with Parliament to outline its position and determine the next steps regarding the matter.

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