Gumbs says CBCS split would be legally and financially complex

GREAT BAY--Minister of Finance Marinka Gumbs on Tuesday told Parliament that any break-up of the Central Bank of Curaçao and St. Maarten (CBCS) and the monetary union it supports would be a legally complex, financially sensitive, and operationally demanding process requiring careful planning, orderly negotiations, and the fair settlement of assets, liabilities, and responsibilities.

Speaking during a Central Committee meeting of Parliament on the future of the monetary union between Curaçao and St. Maarten and the role and functioning of the CBCS, the Minister said the possibility of a separation cannot be viewed in simplistic or political terms. Instead, she said, it must be understood as a serious legal and financial undertaking with major consequences for monetary stability, the banking sector, and public confidence.

Minister Gumbs explained that the CBCS statute already provides a process in the event one country chooses to leave the monetary union. That process, she noted, makes clear that a departure from the union is not something that can happen casually or unilaterally without consequences. Rather, it is governed by rules that require obligations to be settled, equity to be calculated, and stability to be protected.

According to the Minister, if one country were to decide to withdraw from the monetary union, that country would first have to fulfill all of its outstanding obligations to the bank and cooperate in an orderly transition. She stressed that the departure of one partner from a shared central bank arrangement would trigger a series of legal, financial, and technical steps that would have to be handled with precision.

A key part of that process, she said, would involve calculating the departing country’s share of the bank’s equity. This would include an assessment of paid-in capital, general reserves, revaluation reserves, retained earnings, and any other relevant elements tied to the ownership structure of the institution.

Minister Gumbs indicated that Curaçao and St. Maarten, as the parties to the arrangement, are effectively co-owners of the CBCS under the existing framework. That ownership structure, she said, is central to any dissolution scenario, because it determines how the settlement process would have to be approached and how each country’s entitlement would be assessed.

She told Parliament that any payout of a departing country’s proportional share could only take place after all obligations are settled and after the bank has ensured that financial stability is not undermined. In other words, the process would not simply involve dividing assets on paper, but would have to be structured in a way that protects the integrity of the institution, the currency system, and the wider economy.

Minister Gumbs also said that any break-up would require the fair division of assets and liabilities. She outlined that this could include foreign exchange reserves, gold reserves, real estate holdings, financial instruments, and the operational assets of the central bank. The question of who takes what, she made clear, would not be incidental, but fundamental to the fairness and legality of any separation process.

In addition to tangible and financial assets, the Minister signaled that broader obligations and risks would also have to be addressed. A proper unwinding of the union would therefore require careful negotiations over both value and responsibility, including how to avoid disruption to depositors, contracts, financial institutions, and confidence in the monetary system.

Should both countries jointly decide to end the union altogether, Minister Gumbs said the bank itself would have to be liquidated and all assets and liabilities divided according to the shareholder arrangement. If, however, only one country were to leave, the remaining country could potentially continue with what is left of the institution as a national central bank, but only after the settlement process is completed in full.

The Minister stressed that this framework exists precisely to prevent either country from walking away with more or less than its fair share and to ensure that the rights, obligations, and stability concerns of both sides are properly accounted for.

For St. Maarten, she said, a break-up of the monetary union would not only raise issues about division of property and reserves, but also force the country to confront major questions about its monetary future. Among the most important decisions would be whether St. Maarten should introduce its own national currency, adopt an existing foreign currency such as the U.S. dollar or the euro, or pursue some other monetary arrangement. Each of those choices, the Minister suggested, would carry major policy, legal, and institutional implications.

She told Parliament that establishing a new national monetary framework would require more than a political decision. It would demand legislation, institutional design, supervisory and enforcement capacity, staffing, infrastructure, international recognition, and a functioning monetary policy framework. It would also require commercial banks and financial institutions to make technical and regulatory adjustments to accommodate a new system.

Minister Gumbs made clear that any transition would extend well beyond the central bank itself. The banking sector, payment systems, legal frameworks, reporting structures, and public communications environment would all need to be carefully managed to preserve continuity and trust.

She further noted that such a transition would require amendments to the Central Bank statute, bilateral agreements, international notifications, and transitional arrangements. In practical terms, that means any change to the current union would involve not only domestic preparation, but coordination with external institutions and international stakeholders as well.

The Minister said the process could take many months and would require disciplined preparation and expert guidance. But while she acknowledged the scale of the challenge, she emphasized that the situation is manageable if approached with seriousness and planning.

In that context, Minister Gumbs said the Government of St. Maarten is preparing to establish a task force on monetary future and financial stability. The proposed body would be tasked with evaluating the implications of a possible dissolution of the union, examining currency options, analyzing impacts on the banking sector and payment systems, and advising Government on the most prudent way forward.

She said the goal is not to create panic, but to ensure preparedness in the face of a matter that carries lasting implications for the country’s economic and institutional future.

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