Why the Dollar Still Matters Here: Henriquez on Trade, Tourism, and the Anchor Currency

GREAT BAY-WILLEMSTAD--Drs. Candice Henriquez, in her newly published speech and presentation, “Anchored to the Dollar, Realism Above Romanticism in Monetary Policy,” says for Curaçao and St. Maarten, the currency debate has to start with what the economy actually looks like, not what sounds appealing in global headlines. As long as trade, tourism, financing, and everyday pricing stay heavily tied to the U.S. dollar, Henriquez argues the dollar anchor remains the sensible choice. In her view, only a real shift in trade and financing patterns, for instance a sustained turn toward the euro, would make a currency basket or a different anchor worth serious consideration.

Henriquez, Manager of Monetary Policy, Economics and Statistics at the Centrale Bank van Curaçao en St. Maarten (CBCS), delivered the remarks at an Antillenkring meeting on January 13, 2026. The central bank has since posted her full speech and slide deck on its website.

Why exchange rates matter

Henriquez’s starting point is straightforward, exchange rates shape daily economic life. She explains that the exchange rate influences economic activity, inflation, and the balance of payments, which is why central banks treat the exchange rate regime as a major policy choice. She walks through the basic options, from floating systems where markets do the pricing to fixed systems where a currency is tied to an anchor such as the U.S. dollar or a basket of currencies.

For small, open economies with concentrated trade, Henriquez says the issue is fit. Stability carries extra value when an economy is heavily exposed to imports, and when exports are limited and not diversified enough to cushion shocks. She places Curaçao and St. Maarten in that category and argues that the room for currency swings, without a cost, is slim.

The peg, and why 1971 still matters

Henriquez traces today’s framework back to the post Bretton Woods period, noting that the local currency was pegged to the U.S. dollar in 1971 under a conventional peg, meaning a fixed link to one anchor currency. In that system, she explains, the central bank’s primary mandate is external stability, protecting the fixed exchange rate. In practical terms, she is saying monetary policy in the union is built around keeping that anchor credible.

In making her case for the dollar, she says anchor selection usually follows the currency used for most international transactions, because pegging to that currency reduces transaction costs and reduces exchange-rate uncertainty. For the monetary union, she states that more than 65% of international transactions take place in U.S. dollars, and she describes the United States as the principal trading partner. That mix, she argues, explains why the dollar became the anchor and why it remains the anchor.

She also points to a snowball effect. When trade and pricing are already dollar-heavy, the benefits of sticking with the dollar structure tend to reinforce themselves.

Inflation, and the limits of control under a peg

Henriquez then connects the peg to prices at home. She points to a strong relationship between local inflation and U.S. inflation, and she explains that in an import-dependent economy, inflation is often imported through external prices and the trade structure. That matters because it sets limits on what monetary policy can realistically do. Henriquez argues that a central bank operating under a peg cannot behave like a central bank in a floating regime that can prioritize domestic targets with fewer constraints. Under a peg, she says, external stability comes first.

But, she explained, there are risks. If a fixed link cannot be maintained, she says the adjustment is devaluation, and she warns that devaluation in small open economies typically comes with a heavy price, higher inflation, loss of purchasing power, and shaken confidence. She notes that the currency has not been devalued since the peg was introduced in 1971.

She says the CBCS uses a reserve adequacy benchmark expressed as import coverage of at least three months, and she reports import coverage of about 5.1 months. She cites that level as a sign of a solid external position.

She explains that policy transmission runs through liquidity in the banking system. By influencing liquidity, she says the CBCS indirectly affects credit, domestic spending, imports, and ultimately the level of official reserves, which brings day-to-day operations back to the main job: keeping the peg stable.

Henriquez highlights three key tools. Required reserves, she explains, require banks to hold a share of domestic liabilities at the central bank, interest-free. Open market operations are carried out through auctions of certificates of deposit with maturities of two weeks, three months, six months, and one year, with the last three available in both Caribbean guilders and U.S. dollars. She also describes the lending rate facility, which allows banks to borrow from the central bank during temporary liquidity shortages.

The trilemma, and why capital is regulated

Henriquez also tackles the trade-offs. She references the “monetary trilemma,” the idea that a country cannot have a fixed exchange rate, completely free capital movement, and fully independent monetary policy all at the same time. Henriquez says the monetary union combines a fixed exchange rate with some monetary autonomy, and that implies capital movement cannot be entirely unrestricted.

She links that reality to foreign exchange regulation, including a permit requirement for residents conducting capital transactions abroad above Cg 500,000. In normal times, she characterizes the approach as generally permissive. In exceptional periods, she notes, capital movement can be tightened, including during the COVID-19 pandemic, to protect the foreign exchange position.

Henriquez further pointed to a structural issue that has made steering liquidity more complicated: persistent excess liquidity in the money market. She links its origins to the 2010 constitutional reforms and debt relief, and she says overliquidity complicates efforts to shape credit conditions. She also points to digitalization and evolving financial instruments and says the CBCS has included in its strategic planning a quantitative, empirical evaluation of monetary policy and the foreign exchange regime in the coming years, with modernization where needed.

A wider view: the dollar’s global role, and what is shifting

Henriquez ends by pulling back to the international monetary system, mainly to test whether the global position of the dollar is changing enough to affect local logic. She revisits the path from the gold standard to Bretton Woods and then the post-1971 era after the suspension of dollar convertibility to gold, emphasizing that the dollar’s central role persisted. She argues that the dollar’s role in trade invoicing and financing remains larger than the U.S. share of global trade and output, and she describes that dominance as resilient even after the 2008–2009 financial crisis.

While she notes a gradual decline in the dollar’s share of official reserves, she emphasizes that the shift has not mainly gone to traditional alternatives like the euro or yen. Instead, she points to rising use of non-traditional reserve currencies and links this to improved liquidity, technology-driven trading, more active reserve management, and years of low yields in traditional reserve-currency countries.

Henriquez also outlines longer-term pressures that could challenge the dollar over time, including fiscal risk, confidence in U.S. monetary governance, technology-driven competition such as stablecoins and central bank digital currencies, and geopolitical fragmentation. She notes increased gold purchases by some central banks and argues that widely discussed alternatives, including stablecoins and BRICS-linked ideas, face practical constraints when measured against the depth, liquidity, and institutional credibility that reserve currencies require.

𝘈𝘣𝘰𝘶𝘵 𝘋𝘳𝘴. 𝘊𝘢𝘯𝘥𝘪𝘤𝘦 𝘏𝘦𝘯𝘳𝘪𝘲𝘶𝘦𝘻

𝘏𝘦𝘯𝘳𝘪𝘲𝘶𝘦𝘻 𝘩𝘢𝘴 𝘴𝘱𝘦𝘯𝘵 𝘯𝘦𝘢𝘳𝘭𝘺 𝘩𝘦𝘳 𝘦𝘯𝘵𝘪𝘳𝘦 𝘤𝘢𝘳𝘦𝘦𝘳 𝘢𝘵 𝘵𝘩𝘦 𝘊𝘉𝘊𝘚 𝘢𝘯𝘥 𝘪𝘵𝘴 𝘱𝘳𝘦𝘥𝘦𝘤𝘦𝘴𝘴𝘰𝘳, 𝘵𝘩𝘦 𝘉𝘢𝘯𝘬 𝘰𝘧 𝘵𝘩𝘦 𝘕𝘦𝘵𝘩𝘦𝘳𝘭𝘢𝘯𝘥𝘴 𝘈𝘯𝘵𝘪𝘭𝘭𝘦𝘴, 𝘸𝘰𝘳𝘬𝘪𝘯𝘨 𝘰𝘯 𝘤𝘰𝘳𝘦 𝘤𝘦𝘯𝘵𝘳𝘢𝘭 𝘣𝘢𝘯𝘬𝘪𝘯𝘨 𝘵𝘢𝘴𝘬𝘴. 𝘚𝘩𝘦 𝘭𝘦𝘢𝘥𝘴 𝘵𝘩𝘦 𝘔𝘰𝘯𝘦𝘵𝘢𝘳𝘺 𝘗𝘰𝘭𝘪𝘤𝘺, 𝘌𝘤𝘰𝘯𝘰𝘮𝘪𝘤𝘴 𝘢𝘯𝘥 𝘚𝘵𝘢𝘵𝘪𝘴𝘵𝘪𝘤𝘴 𝘥𝘪𝘷𝘪𝘴𝘪𝘰𝘯, 𝘸𝘩𝘪𝘤𝘩 𝘤𝘰𝘮𝘱𝘪𝘭𝘦𝘴 𝘮𝘰𝘯𝘦𝘵𝘢𝘳𝘺 𝘢𝘯𝘥 𝘣𝘢𝘭𝘢𝘯𝘤𝘦 𝘰𝘧 𝘱𝘢𝘺𝘮𝘦𝘯𝘵𝘴 𝘴𝘵𝘢𝘵𝘪𝘴𝘵𝘪𝘤𝘴, 𝘤𝘰𝘯𝘥𝘶𝘤𝘵𝘴 𝘦𝘤𝘰𝘯𝘰𝘮𝘪𝘤 𝘳𝘦𝘴𝘦𝘢𝘳𝘤𝘩 𝘢𝘯𝘥 𝘢𝘯𝘢𝘭𝘺𝘴𝘪𝘴 𝘵𝘰 𝘴𝘶𝘱𝘱𝘰𝘳𝘵 𝘱𝘰𝘭𝘪𝘤𝘺, 𝘢𝘯𝘥 𝘢𝘥𝘷𝘪𝘴𝘦𝘴 𝘵𝘩𝘦 𝘊𝘉𝘊𝘚 𝘔𝘰𝘯𝘦𝘵𝘢𝘳𝘺 𝘊𝘰𝘮𝘮𝘪𝘵𝘵𝘦𝘦, 𝘸𝘩𝘪𝘤𝘩 𝘪𝘯 𝘵𝘶𝘳𝘯 𝘢𝘥𝘷𝘪𝘴𝘦𝘴 𝘵𝘩𝘦 𝘉𝘰𝘢𝘳𝘥 𝘰𝘯 𝘱𝘰𝘭𝘪𝘤𝘺 𝘥𝘪𝘳𝘦𝘤𝘵𝘪𝘰𝘯.

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