Eastern Caribbean Central Bank Act

Link to law: http://laws.gov.ag/acts/chapters/cap-142.pdf
Published: 1983

Eastern Caribbean Central Bank (CAP. 142 1

CHAPTER 142

THE EASTERN CARIBBEAN CENTRAL BANK ACT

Arrangement of Sections
Section

1. Short title.
2. Interpretation.
3. Acceptance of the Agreement.
4. Articles of Agreement to have the force of law.
5. Financial provisions.
6. Implementation of Amendments to the Agreement.
7. Penalties.

SCHEDULE.

EASTERN CARIBBEAN CENTRAL BANK

1011983. An Act to provide for the implementation of the Agree-
S.I. 27,1991.

ment establishing the Eastern Caribbean Central Bank and
for matters connected therewith.

(1st October, 1983 .)

1. This Act may be cited as the Eastern Caribbean short title.
Central Bank Act.

2. In this Act-

"Agreement7 ' means the Agreement establishing the Interpretation.
Eastern Caribbean Central Bank done at Port of
Spain on the 5th day of July 1983, the text of which
is set out in the Schedule and to which Antigua
and Barbuda is a party;

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2 CAP. 142) Eastern Caribbean Central Bank

"Article" means Article of the Agreement;

"Bank" means the Easter Caribbean Central Bank
established by the Agreement.

Acceptance of the
Agreement.

3. The Government of Antigua and Barbuda hereby
enters into, adopts and adheres to the Agreement.

Articles of
Agreement to

4. The Articles of the Agreement shall have the force
have the force of of law in Antigua and Barbuda from such date as the Minister
law. may by notice published in the Gazette appoint; and the

Minister may appoint different days for the coming into force
of such Articles.

Financial
provisions.

5 . Payments required to be made to the Bank by
Antigua and Barbuda under the Agreement shall be paid
out of moneys provided for the purpose by Parliament.

Implementation
of Amendments

6. ( 1 ) Where an amendment of the Agreement is
to the accepted by the Government, the Minister may by Order

amend the Schedule for the purpose of including the
amendment.

( 2 ) Where the Schedule is amended in accordance with
this section, any reference in this Act or in any other
enactment or in any instrument having effect under any such
enactment shall, unless the context otherwise requires, be
construed as a reference to the Agreement as so amended.

Penalties. 7. ( 1 ) Any person who contravenes-

( a ) paragraph ( 3 ) of Article 15; or

(6) paragraph ( 2 ) of Article 16,
is guilty of an offence and is liable on summary conviction
to a fine of five hundred dollars and to imprisonment for
six months.

(2) Any person who contravenes the provisions of
paragraph (1) of Article 18 is guilty of an offence and is liable
on summary conviction to a fine of ten thousand dollars and
to imprisonment for two years.

(3 ) Any person who without lawful authority or excuse,
mutilates currency issued by the Bank whether by cutting,

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Eastern Caribbean Central Bank (CAP. 142 3

tearing, defacing, perforating, writing, printing, drawing,
or stamping thereon or by attaching or affixing hereto
anything in the nature of an advertisement or other notice,
is guilty of an offence and is liable on summary conviction
to a fine of two thousand dollars and to imprisonment for
twelve months.

( 4 ) Any person-

(a) who is or has been made subject to the provi-
sions of Article 34, paragraph (I), and who contravenes
any prescription made by the Bank under that
paragraph; or

(6) who knowingly supplies information that is false
in any material particular or fails to furnish within four-
teen days after a request by the Bank to furnish such
information as is required by the Bank under the pro-
visions of Article 34,

is guilty of an offence and is liable on summary conviction
to a fine of five hundred dollars; and if the offence of which
he is convicted is continued after the conviction he is guilty
of a further offence and liable in respect thereof to a fine
of one hundred dollars for every day which the offence is
so continued.

(5) A person is guilty of an offence under Article 35 if-

(a) he supplies any statement, return, information
or data knowing it to be false in any material particular;
or

(b) he fails to furnish the Bank with the specified
statement, return, information or data within the
required time.

(6) Where an offence is committed by any company
other body corporate, or by any society, association or body
of persons, every person charged with, or concerned or acting
in the control or management of the affairs or activities of
such company, body corporate, society, association or body
of persons is guilty of that offence and is liable to be punished
accordingly, unless it is proved by such person that, through
no act or omission on his part, he was not aware that the

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4 CAP. 142) Eastern Caribbean Central Bank

offence was being or was intended or about to be commit-
ted, or that he took all reasonable steps to prevent its
commission.

SCHEDULE

CENTRAL BANK AGREEMENT

Table of Sections
Section

PART I - PRELIMINARY
1. Short title
2. Interpretation

PART I1 - ESTABLISHMENT OF THE BANK
3 . Establishment of the Bank
4. Purposes of the Bank
5. Place of Office

PART I11 - GENERAL RESERVE FUND AND PROFITS

6. The Establishment and Maintenance of General Reserve

PART IV - ADMINISTRATION AND MANAGEMENT
The Monetary Council
The Board of Directors
The Composition of the Board
The Functions of Governor and Deputy Governor
Disqualification and removal of Governor, Deputy Governor and other

Directors
Incapacity of a Director
Meetings of the Board
Remuneration
Conflict of Interest
Preservation of Secrecy

PART V - CURRENCY

17. Central Rate of the Dollar
18. Issue of Currency Notes and Coins
19. The Printing and Security of Currency

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20. The Withdrawal of Currency from Circulation
21. Reissue of Currency
22. Damaged Currency etc.
23. Enforcement of Laws

PART VI - EXTERNAL RESERVE

24. Maintenance of External Reserve

PART VII - FOREIGN EXCHANGE OPERATIONS
25. The Bank as Depository of the External Assets
26. Dealing in Gold or Silver
27. Institutions with which Bank may deal in Foreign Exchange
28. Terms of Transactions in Foreign Exchange
29. Revaluation Reserve Account

PART VIII - RELATIONS WITH FINANCIAL INSTITUTIONS

30. Banker's Bank
31. Discounts and rediscounts of Bills etc.
32. Conditions for Credit Transactions
33. Reserve Requirements
34. Regulation of Interest Rates
35. Information to be furnished by banks etc.
36. Arrangement for Clearing House

PART IX - RELATIONS WITH THE PARTICIPATING GOVERNMENTS

37. Fiscal Agent and Banker to the Government
38. The Bank as Depository of the Government
39 - 40. Advances to Government
41. Agent of Governments for administration of exchange control and

regulations of off-shore banking

PART X - MISCELLANEOUS
42. Insurance and Guarantee Schemes
43. Prohibited Operations
44. Non-discrimination Clause
45. Regulations

PART XI - ACCOUNTS AND STATEMENTS

46. Financial Year
47. Audit
48. Publication of Reports, etc.
49. Request for Audit in Exceptional Circumstances

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PART XI1 - IMMUNITIES, PRIVILEGES AND ARBITRATION
OF DISPUTES

50. Immunities and Privileges accorded to Employees of the Bank
51. Settlement of Disputes by Arbitration

PART XI11 - WITHDRAWAL AND TERMINATION

52. Procedure for Withdrawal
53. Termination of operations of the Bank

PART XIV - FINAL PROVISIONS

54. Entering into effect of Agreement
55. Provision for Amendments
56. Accession of new members to the Agreement

ANNEXES

Annex I Formula for Sharing of Profits
Annex I1 Compensation Arrangement

AGREEMENT ESTABLISHING THE EASTERN
CARIBBEAN CENTRAL BANK

Preamble

AN AGREEMENT made on the 5th day of July, 1983 between the Govern-
ments of Antigua and Barbuda, The Commonwealth of Dominica, Grenada,
Montserrat, Saint Christopher and Nevis, Saint Lucia and Saint Vincent and
the Grenadines (hereinafter referred to as "the Participating Governments"):

WHEREAS it is desired to maintain a common currency and to establish
a Common Central Bank with powers to issue and manage that currency, to
safeguard its international value, to promote monetary stability and a sound financial
structure and to further the economic development of the territories of the Partici-
pating Governments,

It is hereby agreed as follows:

PART I - PRELIMINARY
1. This Agreement may be cited as the Eastern Caribbean Central Bank

Agreement, 1983.

2. In this Agreement, unless the context otherwise requires-

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"Authority" means the East Caribbean Currency Authority established under
the East Caribbean Currency Agreement 1965;

"appointed Directors" means the Directors other than the Governor and
the Deputy Governor;

"Bank" means the Eastern Caribbean Central Bank established under Article
3 of this Agreement;

"bank" means any financial institution whose operations include the accep-
tance of deposits subject to transfer by the depositor by cheque or other
means of payment transfer;

"banking business" means:-

(i) the business of receiving funds through the acceptance of money
deposits payable on demand or after a fixed period or after notice
or any similar operation through the frequent sale or placement of
bonds, certificates, notes or other securities, and the use of such
funds either in whole or in part for loans or investment for the account
and at the risk of the person doing such business; and

(ii) any other activity recognized by the Bank as customary banking
practice which a financial institution engaging in the activities
described in (i) hereof may additionally be authorized to do.

"Board" means the Board of Directors of the Bank;

"Council" means the Monetary Council established under Article 7 of this
Agreement;

"financial institution" means any person doing banking business:
Provided that for the purpose of this Agreement, unless the context other-

wise requires, all offices and branches of a financial institution in the territories
of the Participating Governments shall be deemed to be one financial
institution;

"person" includes any corporation, either aggregate or sole, and any under-
taking, club, society, association or other body of one or more persons.

PART I1 - ESTABLISHMENT OF BANK
3. (1) There shall be established a body to be known as the Eastern

Caribbean Central Bank to do business in accordance with the provisions of this
Agreement. The establishment of the Bank shall take effect in accordance with
the provisions of Article 54 paragraph (2) of this Agreement and on the date thereof
all the assets and liabilities of the Authority, together with all its rights and obliga-
tions that are not inconsistent with the provisions of this Agreement, shall be deemed
to have been transferred to and to vest in the Bank.

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CAP. 142) Eastern Caribbean Central Bank

(2) The Bank shall be a body corporate having perpetual succession and a
common seal and shall have power to-

(a) enter into contracts and incur obligations;

( 6 ) sue and, subject to Article 50 paragraph 2 of this Agreement, be
sued in its own name;

(c ) acquire, hold, mortgage and dispose of property, whether movable
or immovable;

(d) borrow funds in territories of the Participating Governments or
elsewhere, issuing such evidence of indebtedness as may be appropriate;

( e ) regulate banking business on behalf of and in collaboration with
Participating Governments;

Cf) exercise all powers specifically granted by the provisions of this Agree-
ment to the Bank, and do all such things as shall be necessary to carry out
the powers so granted.

4. The purposes of the Bank are:-

(1) to regulate the availability of money and credit;

( 2 ) to promote and maintain monetary stability;

( 3 ) to promote credit and exchange conditions and a sound financial
structure conducive to the balanced growth and development of
the economies of the territories of the Participating Governments;

(4) to actively promote through means consistent with its other objectives
the economic development of the territories of the Participating
Governments.

5. The Bank shall have its principal office in one of the territories of the
Participating Governments as the Council may determine and may establish such
branch offices and may appoint such agents and correspondents as may be required.

PART I11 - GENERAL RESERVE AND PROFITS
6. (1) The Bank shall establish and maintain a General Reserve to which

shall be allocated any amount that may become available through the operation
of paragraph (3) of this Article.

(2) The Bank shall determine its net profits for each financial year after meeting
all current expenditure for that year and after making such provisions as it thinks
fit including, but not limited to, bad and doubtful debts, depreciation of assets,
contributions to staff and superannuation funds; and with the approval of Council
for all other contingencies and such other purposes as The Board considers necessary:

Provided that unrealised appreciation of assets shall not be taken into account
in the determination of net profits.

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(3) If and so long as the General Reserve is less than five per cent of the
Bank's demand liabilities at the end of a financial year in which net profits were
earned the Bank shall allocate to the General Reserve one half of such net profits
or such smaller amount as will make that reserve equal to five per cent of those
liabilities:

Provided however that with the written agreement of each of the Participating
Governments further allocation may be made to increase the General Reserve
beyond five per cent but not more than ten per cent of the Bank's demand liabilities.

(4) After allocations have been made to the General Reserve in accordance
with the provisions of paragraph (3) of this Article and after any allocations have
been made by or with the approval of the Council in accordance with Articles
24 (5), 29 and 42 (4) of this Agreement any net profits remaining referred to
in Annex I to this Agreement as the distributable profits of the Bank, shall be
paid to the Participating Governments in accordance with the formula for profit-
sharing provided for in the said Annex I to this Agreement.

(5) Any change in the formula for profit-distribution under paragraph (4)
of this Article shall apply only after each Participating Government gives its approval
thereto in writing to the Bank.

PART IV - ADMINISTRATION AND MANAGEMENT
7. (1) There shall be established a Monetary Council which shall consist

of one Minister appointed by each Participating Government in such manner as
it may determine. Each such Minister shall designate an Alternate to serve on
the Council in his absence.

(2) The Council shall meet not less than twice each year to receive from
the Governor the Bank's report on monetary and credit conditions and to provide
directives and guidelines on matters of monetary and credit policy to the Bank
and for such other purposes as are prescribed under this Agreement.

(3) The Council shall establish its own procedures and shall elect one of the
Ministers to serve as Chairman. The term of the Chairman shall be one year.
In addition to his power to vote, he shall have a casting vote in the event of a tie.

(4) In addition to its regular meetings, the Council may hold such additional
meetings as it may decide or when requested by at least two of its members.

(5) A quorum of the Council shall consist of five members and decisions
shall be taken by a simple majority of votes of the members present except as
otherwise prescribed under this Agreement.

(6) Decisions of the Council on matters of monetary and credit policy under
paragraph (2) shall be communicated in writing to the Bank and such decisions
shall be binding on the Bank while they remain in effect.

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(7) Whenever, in the judgment of the Board, there arises a situation where
any action contemplated by the Bank requiring the approval of the Council should
not be postponed until the next meeting of the Council and cannot await the call-
ing of a special meeting of the Council, the Board shall request the Council members
to vote without meeting. The Board shall present to each Council member by
rapid means of communication a motion embodying the proposed action. At the
expiration of the period prescribed for voting, the Board shall record the results,
and the Governor shall notify all members. Decisions by this method shall be
arrived at by a simple majority of all the members of the Council.

8. (1) The powers of the Bank shall be vested in a Board of Directors,
which subject to Article 7 , shall be responsible for the policy and general administra-
tion of the Bank.

(2) The Board shall have power to make, alter or revoke regulations, notices
and orders for the purpose of giving effect to the provisions of this Agreement.

(3) The Board shall consist of the Governor, the Deputy Governor and one
Director appointed by each Participating Government.

(4) (a) The seal of the Bank shall be kept in the custody of the Governor
or the Deputy Governor and shall be authenticated by the Governor or Deputy
Governor and one other Director authorized by the Board to act in that behalf;

( b ) All documents, other than those required by law to be under seal,
made by, and all decisions of, the Board may be signified under the hand
of the Governor or the Deputy Governor.

9. (1) The appointed Directors shall be persons of recognised standing and
experience in one or more of the following areas:-

(a) Fiscal and Monetary Policy

(6 ) Finance and Accounting

(c) Banking

(d) Economics

( e ) Law, or

V) Other related fields
appointed by the Council on the recommendation of each of its members in a
manner so that each of the Participating Governments shall be represented among
those Directors on the Board. In exercising his powers each appointed Director
shall consider the interests of all the territories subject to the jurisdiction of this
Agreement.

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(2) The appointed Directors shall be appointed for terms not exceeding three
years and shall be eligible for re-appointment.

(3) The Governor and the Deputy Governor shall be appointed by the Council
for a period of not exceeding five years and they shall be eligible for re-appointment.

(4) The Governor shall-

(a) preside as chairman at the meetings of the Board;

(b) serve as chief executive officer of the Bank to be in charge of and
responsible to the Board for the implementation of the policy and the day
to day management of the Bank;

(6) attend all meetings of the Council

(5) The Governor shall have power to act, contract and sign instruments
and documents on behalf of the Bank. He may pursuant to resolutions of and
to the extent deemed appropriate by the Board, delegate such powers to other
officers.

(6) The composition of the first Board of the Bank shall, for the purpose
of ensuring continuity, include all persons serving as directors of the Authority
on the day immediately prior to the date on which the Bank is deemed to have
been established in accordance with Article 54 paragraph (2) of the Agreement
as well as the person then serving as the Deputy Managing Director of the Authority:

Provided that-

(a) the persons then serving as Managing Director and Deputy Managing
Director of the Authority shall serve respectively as Governor and Deputy
Governor of the Bank;

(6) (i) the term of each member of the first Board of the Bank except
the Governor and Deputy Governor, shall expire six months
after the establishment of the Bank, and

(ii) the term of the Governor and Deputy Governor shall expire
one year after the establishment of the Bank;

(6) all members of the first Board of the Bank shall be eligible for
re-appointment.

10. (1) During the absence or disability of the Governor or during any
vacancy in the office of the Governor, the Deputy Governor shall exercise the
powers and duties of that office. The Board shall make provision for the simultaneous
absence or disability of the Governor and the Deputy Governor.

(2) The Governor and the Deputy Governor shall devote the whole of their
professional time to the service of the Bank and while holding office shall not

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without the prior approval of the Board engage in any business, profession or
employment, whether remunerated or not, but they may-

(a) act as members of any board or commission appointed by the Council;

(6) become governors, alternate governors, directors or members of any
organ, by whatever name called, of any international financial institution,
established under any agreement or convention to which one or more of the
Participating Governments shall have adhered or given support or approval;

(6) become members of the board of any corporation organised by one
or more of the Participating Governments for the purpose of insuring deposits
in financial institutions.

(3) The Governor and the Deputy Governor shall not receive any salary or
contribution to, or supplementation thereof from any source other than the Bank
without the approval of the Council.

(4) The Directors shall be paid such remuneration as shall be determined
by the Board with the approval of the Council. The Board shall have power to
determine allowances to be paid to Directors.

1 . (1) No person shall be appointed or shall remain Governor, Deputy
Governor or appointed Director of the Bank who is or becomes:-

(a) Director, officer or employee of any financial institution within or
without the territories of Participating Governments:

Provided that Directors of wholly-owned Government Institutions may
serve as Directors.

(b) member of the legislature (by whatsoever name called) of a
Participating Government.

(2) The Governor, the Deputy Governor or any appointed Director may resign
his office by giving notice in writing to the Council.

(3) The Governor, the Deputy Governor or any appointed Director shall
be removed from his office by the Council upon:

(a) a finding by two-thirds of all of the members of the Board of perma-
nent incapacity or serious neglect of, or misconduct in, office; or

(b) on conviction for an offence involving dishonesty or fraud or that
is punishable with imprisonment for twelve months or more or a conviction
for an offence contrary to Article 15 or 16 of this Agreement; or

(c) his becoming bankrupt or compounding with or suspending payment
to his creditors.

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(4) Any appointed Director may be removed from the Board by the Council
acting on the recommendation of the Participating Government of the territory
from which he was appointed.

12. (1) If the Governor, Deputy Governor or any appointed Director dies
or resigns or otherwise vacates his office before the expiry of the term for which
he has been appointed, as soon thereafter as may be practicable the Council shall
appoint another to serve for the unexpired period in the manner specified in Article
9 of this Agreement.

(2) Notwithstanding the provisions of Article 11 paragraph (3) of this Agree-
ment the Council, on the finding of the Board of the continuing absence or incapacity
of an appointed Director, may on the recommendation of the Participating Govern-
ment whose recommendation had led to his appointment, or its own initiative
in the event that the finding is in respect of the Governor or Deputy Governor,
appoint another person to serve until the expiry of the term or a finding by the
Board that such state has ceased.

13. (1) The Board shall meet as often as the business of the Bank may
require but not less than once every three calendar months. The Board may provide
for regular meetings for which two weeks' notice shall be necessary; special meetings
shall be convened at the written request of the Governor or of any three appointed
Directors for which reasonable notice shall be required.

(2) For the purpose of voting at a Board meeting, each member of the Board,
except the Governor and Deputy Governor, shall have one vote. The Governor
and Depty Governor shall not vote. In the event of an equal division, the Chair-
man shall have a casting vote.

(3) A quorum at any meeting of the Board shall consist of five appointed
Directors and decisions shall be taken by a simple majority of votes except as
herein otherwise provided.

(4) Where a matter relating to a Participating Government is to be deter-
mined by the Board, the Government concerned shall have the right, if it so desires,
to send a representative to that meeting of the Board with a view to assisting
the Board in making an informed judgment on the matter. The representative
shall not, however, have the right to vote, and shall be present only for the specific
item for which, in the opinion of the Board, his presence was required.

14. (1) All appointments of officers and employees of the Bank shall be
on such terms and conditions as shall be prescribed by the Board.

(2) The Governor and Deputy Governor shall be paid such salary and allowances
as may be approved by the Council.

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15. (1) The Governor, the Deputy Governor and each appointed Director
shall not act as a representative of any commercial, financial, agricultural, industrial
or other (private) interest: and neither they nor any other officer or employee
of the Bank shall receive or accept directions from any such interest in respect
of duties to be performed under this Agreement.

(2) Every Director shall fully disclose to the Board any (private) interest,
industrial or other, which he may directly or indirectly hold or be connected with
and which becomes the subject of Board action, and shall refrain from voting
on any matter related thereto:

Provided that such an interest, if so disclosed shall not disqualify the interested
party for the purpose of constituting a quorum.

(3) No Director, officer or employee of the Bank in his official capacity shall
accept any gift or advantage for himself or for any person with whom he may
have family, business or financial connections.

16. (1) The Governor, the Deputy Governor, every appointed Director,
and every officer and employee of the Bank shall take an oath of secrecy in the
form prescribed by the Board,

(2) Except for the purpose of the performance of his duties or the exercise
of his functions, no director, officer or employee of the Bank shall disclose to
any person any material information relating to the affairs of the Bank or any
financial institution or other person, firm, company or organisation which informa-
tion he has acquired in the performance of his duties or his functions.

(3) The validity of any act or proceeding of the Bank shall not be affected
by any vacancy amongst the Directors or by a defect in the appointment of a
Director.

PART V - CURRENCY
17. (1) The monetary unit of the Participating Governments shall be the

Eastern Caribbean Dollar divided into one hundred cents, with such external value
as may from time to time be declared in accordance with paragraph (2) of this
Article.

(2) The Bank shall on the recommendation of the Board approved by a deci-
sion of the Council, both such recommendation and decision having been adopted
unanimously by all their members declare the external value for the Eastern
Caribbean Dollar, having due regard to the obligations that any Participating
Government has assumed in accordance with the provisions of the Articles of Agree-
ment of the International Monetary Fund:

Provided that any declaration made by the East Caribbean Currency Authority
fixing the external value of the East Caribbean Dollar shall remain in full force
and effect until altered by the Bank under this paragraph.

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(3) Provision shall be made by the Council to arrange for reasonable com-
pensation to a Participating Government adversely affected by a change in external
value of the Eastern Caribbean Dollar, in accordance with Annex I1 to the Agree-
ment. Notice of any change in external value of the Eastern Caribbean Dollar
shall be published in the Official Gazette of each of the Participating Govern-
ments and communicated to the Public in such other manner as the,Bank shall
decide.

18. (1) The Bank shall have the sole right to issue currency notes and coins
in the territories of the Participating Governments and no other person or authority
shall issue currency notes, bank notes or coins, (whether or not of a commemorative
nature), or any documents or token payable to bearer on demand having the
appearance of or purporting to be currency.

(2) Currency issued or deemed by the Bank to have been issued by it shall
in accordance with the provisions of paragraph (3) of this Article, be legal tender
in the territories of the Participating Governments for the discharge of all public
and private obligations and shall include on the date that this Agreement takes
effect, all currency issued by or deemed to have been issued by the Authority.

Currency issued or deemed by the Bank to have been issued by it shall
include-

(i) Currency issued by the East Caribbean Currency Authority as well
as currency bearing its inscription that may be put into circulation
by the Bank.

(ii) Currency issued by the Bank.

(iii) Such other Currencies as the Board may by resolution indicate
hereafter.

(3) Notes and commemorative coins issued or deemed to have been issued
by the Bank shall be legal tender for the payment of any amount and other coins
issued or deemed to have been issued by the Bank shall be legal tender at their
face value up to an amount not exceeding twenty dollars in the case of coins of
a denomination not less than fifty cents, and not exceeding five dollars in the
case of coins of a lower denomination.

(4) Notwithstanding paragraph (3) of this Article, a note or coin issued or
deemed to have been issued by the Bank shall not be legal tender:-

(a) if, in the case of a note, it has been altered in any material way;

(b) if, in the case of a coin, it has been tampered with.

(5) (a) A note shall be deemed to have been materially altered, if it has
been mutilated or has been defaced.

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(b) A coin shall be deemed to have been tampered with if it has been
impaired, diminished or lightened otherwise than by fair wear and tear or
has been defaced.

19. (1) The Bank shall arrange for the printing of currency notes and the
minting of coins and for all matters relating thereto, and for the security and
safe keeping of unissued currency and for the custody and destruction, as necessary,
of plates, dies and retired currency.

(2) Currency issued by the Bank shall be in such denominations and of such
composition, form and design as shall be approved by the Council on the recom-
mendation of the Board.

(3) The characteristics of currency to be issued by the Bank shall be published
in the Official Gazette of each of the Participating Governments.

20. The Bank shall have the power to call in, for the purpose of withdraw-
ing from circulation, any currency issued or deemed by the Bank to have been
issued by it on payment of the face value thereof. Any currency so recalled shall,
in accordance with the terms of a notice which shall be published in the Official
Gazette of each of the Participating Governments and communicated to the public
in such other manner as the Bank shall decide cease to be legal tender:

Provided that the holders of such currency shall be entitled, at any time within
a period of not less than five years as may be specified in the notice and thereafter
at the sole discretion of the Bank, to claim payment from the Bank in accordance
with such regulation as it may issue.

2 1. The Bank shall issue, reissue, and exchange on demand currency issued
or deemed by the Bank to have been issued by it:

Provided that in the event of the temporary unavailability of a requested issue
or denomination, the Bank may deliver currency of available issues and denomina-
tions that most nearly approximate those requested.

22. (1) No person shall be entitled to recover from the Bank the value
of any lost or stolen currency, except as may be provided under the terms of
a waiver expressly executed in respect of the assumption by the Bank of risks
incident to shipments of currency.

(2) The conditions under which mutilated or otherwise damaged currency
may be exchanged or refunded at partial or face value shall be determined by
regulations issued by the Bank.

23. The Bank shall assist in the enforcement of any law related to the
counterfeiting of currency in the territories of the Participating Governments and
certification by a duly authorised officer of the Bank that an item in question
is or is not genuine shall be prima facie evidence of the fact in any legal proceeding
in those territories.

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Eastern Caribbean Central Bank (CAP. 142 17

PART VI - EXTERNAL RESERVE
24. (1) The Bank shall maintain an External Reserve consisting of all or

any of the following on such terms and conditions as the Board may prescribe-

(b ) foreign exchange in the form of currency or bank balances held abroad;

(6) any internationally recognized reserve assets;

(4 bills of exchange and promissory notes denominated in foreign
currency and payable at any place outside the territories of the Participating
Government;

(e) treasury bills issued by foreign governments;

u> securities issued or guaranteed by foreign governments or international
institutions.

(2) Subject to paragraph (3) of this Article the Bank shall at all times main-
tain the External Reserve in an amount not less than sixty per cent of the value
of the currency issued or deemed by the Bank to have been issued by it and in
circulation and other demand liabilities but excluding coin issued for commemorative
purposes.

(3) The percentage referred to in paragraph (2) of this Article may be changed
by the Bank on the unanimous agreement of all of the members of the Council.

(4) If the External Reserve has declined or in the judgment of the Board
appears likely to decline in such a way as to jeopardise the adequacy of such reserve
the Bank shall submit to the Council a report on the reserve position and the
causes that have led or may lead to such a decline together with recommendations
concerning the measures that may be deemed necessary to forestall or otherwise
remedy the situation. The Bank shall make further reports and recommendations
at intervals not exceeding six months until such time as, in its judgment, the
situation has been rectified.

(5) If at any time the assets held under this Article together with such other
assets as the Bank is permitted to hold under Articles 31 and 40 of this Agreement
are less than the aggregate amount of the currency issued or deemed by the Bank
to have been issued by it and in circulation and other demand liabilities, such
deficiency shall be a liability of the Participating Governments in the proportions
prescribed in Article 6 paragraph (4) of this Agreement.

(6) The Bank may establish such other external reserve funds including
national reserve funds, as the Council may from time to time approve.

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18 CAP. 142) Eastern Caribbean Central Bank

PART VII - FOREIGN EXCHANGE OPERATIONS
25. (1) The Bank shall be the depository of the external assets of the Partici-

pating Governments:
Provided that the Bank may designate such agents and correspondents as

it may select to hold these assets.

(2) The Bank may serve as the depository of the external assets of boards,
agencies, the social security fund and other statutory bodies of such Participating
Governments.

26. The Bank may:
(a) buy, sell, or deal in gold coins or bullion or other precious metals;

(6) buy, sell, or deal in foreign exchange, using for these purposes any
of the instruments commonly used by bankers;

(6) open and maintain accounts abroad;

(d) open and maintain accounts and act as agent or correspondent for
foreign central banks, foreign financial institutions, foreign governments,
foreign government agencies and institutions and international financial
institutions.

27. The Bank shall deal in connection with the operations enumerated in
Article 26 hereof only with the Participating Governments, their boards and agen-
cies, their social security funds and other statutory bodies, local government bodies,
foreign central banks, local and foreign financial institutions, foreign governments,
foreign government agencies and institutions and international financial institutions.

28. (1) The Bank shall from time to time determine .the rates at which
it will buy, sell or deal in gold and foreign currencies.

(2) The Bank may determine and make public the rates at which gold and
foreign currencies may be bought, sold or dealt in by banks and other persons
authorised to do so in the territories of the Participating Governments.

(3) The Bank may close the foreign exchange markets for the Eastern
Caribbean Dollar in the territories of the Participating Governments during a
period of not more than two working days if it deems such action to be necessary
to prevent disorderly conditions in the foreign exchange markets and considers
it to be in the interest of the Participating Governments:

Provided that the Bank may request the Council that a reasonable extension
of the period of closure be granted, during which the Bank shall proceed to remove
the causes of the disorder.

29. (1) The gains arising from any change in the valuation of the Bank's
assets or liabilities in, or denominated in gold, special drawing rights or foreign
currencies as a result of alteration of the external value of the Eastern Caribbean

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Eastern Caribbean Central Bank (CAP. 142 19

Dollar, or of any change in the value of such assets or liabilities relative to the
Eastern Caribbean Dollar, shall be credited to a special account entitled "Revalua-
tion Reserve Account" and neither the gains nor the losses arising from any such
change shall be included in the computation of the annual profits and losses of
the Bank.

(2) Any gain arising from changes described in paragraph (1) of this Article
during any financial year of the Bank shall be used:-

(a) First, to redeem any securities held by the Bank as a result of previous
losses in accordance with paragraph (4) of this Article;

(b) Second, to create or increase the credit balance in the Revaluation
Reserve Account.

(3) Any credit balance in the Revaluation Reserve Account at the end of
each financial year of the Bank shall be held in reserve, and shall be used only
for the purpose described in paragraph (4).

(4) The losses arising from changes described in paragraph (1) of this Article
shall be set off against any credit in the Revaluation Reserve Account and, not-
withstanding any other provisions of this Agreement, if such balance is insuffi-
cient to cover such losses, the Participating Governments shall issue and cause
to be transferred to the ownership of the Bank non-interest bearing, non-negotiable
securities to the extent of the deficiency in the proportions according to which
profits may be distributed to each Participating Government pursuant to Article
6 paragraph (4) of this Agreement.

(5) No credits or debits shall be made to the Revaluation Reserve Account
except in accordance with the provisions of this Article.

PART VIII - RELATIONS WITH FINANCIAL INSTITUTIONS

30. The Bank may open accounts for, and accept deposits from financial
institutions doing business in the territories of the Participating Governments under
such terms and conditions, including the payment of interest and the establish-
ment of charges thereon, as the Board may from time to time determine.

31. The Bank may:

(1) purchase from, sell to, discount and rediscount for financial institu-
tions bills of exchange and promissory notes drawn or made for
bona fide commercial, industrial or agricultural purposes, bearing
two or more good signatures at least one of which shall be that
of a bank and maturing within ninety-one days from the date of
their acquisition by the Bank:

Provided that bills of exchange and promissory notes drawn
or made for the purposes of financing seasonal agricultural opera-
tions or marketing of crops shall mature within one hundred and
eighty-two days from the date of their acquisition;

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20 CAP. 142) Eastern Caribbean Central Bank

(2) grant to financial institutions advances, whether by loans or over-
drafts, for periods not exceeding ninety-one days secured by-

(a) instruments specified in paragraph (1) of this Article;

(b) warehouse warrants and documents of title issued in respect of
staple commodities of other goods duly insured:

Provided that the Bank shall determine from time to time the
maximum percentage of advances in relation to the current value of such
commodities or goods;

(c) holding of any such assets that the Bank is permitted to buy,
sell or deal in under paragraphs (a) and (b) of Article 26 of this Agreement;

(d) treasury bills and securities issued or guaranteed by any of the
Participating Governments or its agencies, subject as provided in Article
40 of this Agreement:

Provided that in the case of advances granted under paragraph (2)
for the specific purposes of promotion of those sectors which are deemed
by the Bank to be priority sectors in the economies of the territories of
the participating Governments, the Board may authorise the extension
of such advances to a period up to 12 months.

32. The Bank shall fix from time to time its rates for discounts and
rediscounts. It may establish differential rates and ceilings for various classes of
transactions or maturities.

33. (1) With the approval of the Council the Bank may, from time to time,
prescribe either-

(a) by written notice to the main office of each financial institution in
the territories of the Participating Governments; or

(6) by publishing in newspapers of general circulation in the territories
of the Participating Governments or in the Official Gazette of each territory,

the maintenance of required reserves, including marginal required reserves, against
deposit and other similar liabilities, specified for this purpose. Such reserves shall
be maintained either by way of cash holdings with each financial institution or
by way of deposits with the Bank.

(2) With the approval of the Council the Bank may require financial institu-
tions of a given class or classes to hold such securities (including securities that
may be issued by a Participating Government as provided in Article 40, paragraph
(2) sub-paragraph (6) of this Agreement in substitution for its liabilities to finan-
cial institutions in respect of special deposits), issued or guaranteed by one or
more of the Participating Governments, as the Board may designate for purposes
of this Article in amounts not to exceed ten per cent of such institutions' deposits
and similar liabilities.

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Eastern Caribbean Central Bank (CAP. 142 2 1

(3) The Bank may prescribe different reserve ratios for different classes of
deposit and other similar liabilities and may prescribe the method of their
computation:

Provided that: -

(i) The total amount of reserves that the financial institutions are
required to hold shall be such percentage of the total deposit and
other similar liabilities to which reserve ratios have been made
applicable, as the Council may determine from time to time.

(ii) the reserve ratios shall be uniform for all banks and for all credit
institutions although the ratios may differ between the two classes:

Provided that in the case of banks or credit institutions incor-
porated in any of the countries of the Participating Governments,
and in respect of which at least seventy-five per cent of the shares
are locally owned, the Bank may allow such banks or institutions
a period not exceeding three years to attain the Bank's reserve
requirements.

(iii) any such prescriptions of, or increases in, the required reserve ratios
shall be effective only after at least 15 days' notice thereof has been
communicated to the financial institutions;

(iv) reserves held as demand deposits with the Bank, may under such
regulations and subject to such charges as may be prescribed by
the Bank, be withdrawn temporarily by the financial institutions
for the purposes of meeting their existing liabilities and may further
serve as a basis for the clearance of cheques and the settlement of
balances among financial institutions.

(4) The Bank may impose on any financial institution that fails to maintain
required reserves in accordance with paragraphs (2) and (3) of this Article a charge
at an annual rate not exceeding five percentage points above the highest rate fixed
by the Bank pursuant to Article 32 of this Agreement for any of its operations
on the amount of the deficiency for so long as the deficiency continues. Such charge
shall be payable to the Bank on such date as may be prescribed by the Bank
and may be recovered by deduction from any balance of the financial institution
held by the Bank.

34. (1) The Bank may, from time to time prescribe either-
(a) by written notice to the main office of each financial institution in

the territories of the Participating Governments; or

(b) by publication in newspapers of general circulation in the territories
of the Participating Governments or in the Official Gazette of each territory-

(i) the method of computation and minimum and maximum rates of
interest payable in respect of deposit and other similar liabilities;

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2 2 CAP. 142) Eastern Caribbean Central Bank

(ii) the permissible purposes, aggregate ceilings, maximum amounts
beyond which the Bank's approval is necessary, maximum maturities
and maximum interest chargeable, and minimum cash, margin or
security required, in respect of-
(A) the making of advances whether by loans or overdrafts and

investments;
(B) the discounting of bills and notes;
(C) the issuing of letters of credit;

(D) the granting of acceptances and other credit; and

(iii) the manner of the disclosure to the public and to-
(A) each depositor in a financial institution the effective annual

interest rates payable in respect of deposits made therewith;

(B) each person to whom credit is extended the effective annual
interest rate payable in respect thereof;

Provided that prescriptions under clauses (i) and (ii) shall require a decision
of the Board, adopted by two-thirds of all the appointed Directors who, in taking
that decision, shall take cognisance of such general guidelines as the Council may
indicate.

(2) In any prescription by the Bank under this Article the Bank may, for
purposes of determination of the maximum interest chargeable under (6 ) (ii) or
in order to arrive at the effective annual interest rate payable by any person under
(iii) (B), require that the method of computation should include any service or
other charges payable in respect of the credit extended by the financial institution,

(3) O n the recommendation of the Board, adopted by two-thirds of all of
the appointed members, and the approval of Council adopted by two-thirds of
all its members, the provisions of paragraph (1) of this Article may be applicable
in the manner therein indicated to every person, having as a principal object the
extension of credit to the public generally or to particular members thereof, who
in the ordinary course of business, during any calendar year extends as a minimum
such amount of credit as is specified in the decision. The Bank may examine
the accounts, books and papers of any person that it has reason to suspect is
extending or has extended credit in violation of this paragraph and the refusal
to submit such accounts, books and papers shall be prima facie evidence of such
violation.

(4) Notices issued under this Article shall come into effect on such date specified
not earlier than thirty days after the issue date. The Bank in its notices may
differentiate, according to the nature of their business, between banks and other
financial institutions as well as other creditors or classes thereof in respect of items
set out in paragraph (1) of this Article.

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Eastern Caribbean Central Bank (CAP. 142 2 3

(5) The Council may authorise or require the Bank to apply different prescrip-
tions under clauses (i) and (ii) of paragraph (1) (b) of this Article in respect of
the territories of the Participating Governments according to their different economic
circumstances:

Provided that any prescriptions purporting to relate to the different economic
circumstances of the territory of any Participating Government should have the
support of the Participating Government concerned.

35. (1) Every financial institution shall furnish to the Bank at such time
and in such manner as the Bank may prescribe, such information and data as
the Bank may require for the proper discharge of its functions and responsibilities
and in order to verify compliance with directions issued under Articles 33 and
34 of this Agreement the Bank may require any person who is or has been made
subject thereto to open his books for inspection.

(2) Without limiting the generality of pargraph (1) of this Article every financial
institution shall, at the request of the Bank, in relation to that financial institution's
operations in the territory of a Participating Government, submit to the Bank
in such form as the Bank may from time to time approve-

(a) not later than fourteen days after the last day of the month to which
it relates, a monthly statement of assets and liabilities at the end of each month;

(6) not later than fourteen days after the end of the quarter to which
it relates, a quarterly return providing an analysis of customers' liabilities
to the financial institution in respect of loans, advances and other assets of
the financial institution at the end of each quarter;

(c ) within such period as the Bank may determine such other returns
as the Bank may require:
Provided that the Bank may in writing extend the period for the furnishing

of such statements and returns.

(3) The Bank may require a financial institution to submit such further
information and data relating to the statements and returns described in paragraph
(2) of this Article and such further information and data shall be submitted within
such period and in such manner as the Bank may require.

(4) No statement, return, information or data shall be required under
paragraph (I), (2) or (3) of this Article with respect to the affairs of any particular
customer of a financial institution.

(5) All statements and returns submitted by a financial institution under
paragraph (2) hereof and any data or information submitted by a financial institution
under paragraph (1) or (2) hereof, shall be regarded by the Bank as secret; but
the Bank may prepare and publish consolidated statements relating to the territories
of the Participating Governments individually or collectively, aggregating the figures
in the monthly or quarterly returns furnished under sub-paragraphs (a) and (b)
of paragraph (2) of this Article.

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2 4 CAP. 142) Eastern Caribbean Central Bank

(6) At the request of a Participating Government, the Bank shall arrange
for that Government to be supplied with a copy of any statement or return furnished
by a financial institution under paragraph (2) in relation to its operation in the
territory of that Government and all statements and returns so supplied shall be
regarded by the Government as secret.

36. The Bank may at a suitable time in conjunction with other banks
organize clearing houses in such places as may be desirable.

PART IX - RELATIONS WITH THE PARTICIPATING GOVERNMENTS
37. (1) The Bank shall be the banker, fiscal agent of, and adviser to, the

Participating Governments on monetary and financial matters and shall be the
depository of funds of those Governments:

Provided that in such cases, for such periods of time, and on such other terms
and conditions as may be agreed between each Participating Government and
the Bank-

(a ) the Bank may act in such capacities to government boards and
agencies, social security funds and other statutory bodies and local govern-
ment bodies, and

( b ) the Participating Government may maintain working balances with
and generally use the services of other financial institutions.

(2) The Council, as well as any Participating Government may request the
Bank to render advice and to furnish reports on matters relating to the purposes
of the Bank as set forth in Article 4 of this Agreement.

(3) It shall be the duty of the Bank to inform and advise the Council and
any Participating Government concerning any matter that in the opinion of the
Bank is likely to effect the achievement of the Bank's purposes.

(4) The Bank may represent any Participating Government at any
international conference at which its attendance is requested by such Participating
Government.

38. The Bank shall, upon designation by any Participating Government,
serve as the depository and fiscal agency of, and the institution through which
dealings by the Participating Government shall be conducted with, international
financial institutions of which that Participating Government is a member, and
other agencies and countries.

39. Except in accordance with Article 31 paragraph (2) sub-paragraph (d)
and Article 40, the Bank shall not, directly or indirectly-

(1) make advances to any Participating Government, its boards and
agencies, social security funds and other statutory bodies and local
government bodies; or

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Eastern Caribbean Central Bank (CAP. 142 2 5

(2) acquire the notes, bills, securities or other evidence of debt of any
Participating Government, its boards and agencies, social security
funds and other statutory bodies and local government bodies; or

(3) acquire the notes, bills, securities or other evidence of debt
guaranteed by any Participating Government, its boards and agen-
cies, social security funds and other statutory bodies and local govern-
ment bodies:

Provided that this Article shall not operate to prevent the acquisition by the
Bank of securities transferred to it by a Participating Government to evidence
a liability in accordance with Article 24 paragraph (5) or Article 29 paragraph (4).

40. (1) The Bank may, subject to such terms and conditions as the Board
may prescribe:-

(a) make temporary advances to each Participating Government to meet
its seasonal needs in an amount not to exceed during a given financial year
of that Participating Government five per cent of its average annual recur-
rent revenue of that Government as determined by the Bank, over the three
preceding financial years.

(6) purchase, sell, discount and rediscount treasury bills, issued by any
of the Participating Governments, payable in Eastern Caribbean Dollars,
forming part of a public issue, and maturing within ninety-one days of the
date of their acquisition by the Bank; but the holding of treasury bills of
any one Government at any one time, shall not exceed ten percent of the
estimated recurrent revenue of that Government as determined by the Bank
for the current year;

I

(other than treasury bills)

fifteen years from the

by it and in circulation and other demand liabilities:

ed that the percentages mentioned in sub-paragraphs (a), (6) and (c )
by the Council annually and approved or varied either generally
respect of any Participating Government:

(Id) invest in securities of the Participating Governments to any amount
and o mature at any time on behalf of staff the superannuation funds and
o t h e ~ similar funds of the Bank;

purchase and sell bonds of any Corporation established under the
any Participating Government or Governments for the express

financing development within the territory or territories thereof:

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26 CAP. 142) Eastern Caribbean Central Bank

Provided that-

(i) the bonds by their terms shall mature in not more than ten years
from the date of their acquisition by the Bank;

(ii) repayment of their interest and principal shall be guaranteed by
the Participating Government or Governments under whose authority
the Corporation is established;

(iii) the Bank may, upon default of the issuer, whether in whole or in
part, invoke the guaranty under (ii) solely by notification to the
guarantor or guarantors, and satisfy itself to the full extent of the
obligation outstanding, the amount thereof being deemed to have
been accelerated for the purpose of the guarantee, by charging the
profits of the Bank distributable to the guarantor or the guarantors
pursuant to Article 6 paragraph (4) during the year of default and
succeeding financial years of the Bank;

(iv) the amount of bonds held in respect of any territory by the Bank
under Article 40 paragraph (1) sub-paragraph (e ) of this Agreement
shall not at any time exceed two and one half per cent of the average
annual recurrent revenue of that Government, as determined by
the Bank, over the prior three financial years.

(2) Without limiting the generality of the provisions of paragraph (1) the
Bank is expressly authorized to-

(a) make advances to any Participating Government on such terms and
conditions as may be agreed, in respect of subscriptions and other payments
resulting from or incidental to, membership in any international financial
institution established under governmental auspices, its participation in any
account thereof and any transactions and operations undertaken in connec-
tion therewith; and

(b) assume pursuant to agreement with each Participating Government,
its liabilities due and outstanding to financial institutions in respect of special
deposits required of them as of the date on which the Bank shall be deemed
to have been established in accordance with Article 54 paragraph (2) of this
Agreement:

Provided that each such agreement shall specify the terms and condi-
tions of repayments to the Bank by the Participating Government of the
liabilities thus assumed, and that Participating Government shall obligate
itself not to require further special deposits of any financial institutions
operating within its territory.

4 1. (1) The Bank shall act as agent for the Participating Governments in
the administration of any law or regulation relating to exchange control; and in
accordance with such instructions as the Council may from time to time issue,
in the licensing of any offshore banking or offshore trust operation.

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Eastern Caribbean Central Bank (CAP. 142 2 7

( 2 ) The Bank shall monitor the operations of offshore financial institutions
in accordance with the laws or regulations under which such financial institutions
have been licensed to operate and shall take account of such guidelines as the
Council may, from time to time, issue for this purpose.

( 3 ) Returns, statements, accounts or information required to be submitted
to the Participating Governments under the provisions of any such law or regula-
tion shall be simultaneously submitted to the Bank.

PART X - MISCELLANEOUS
42. (1) The Bank may, with the approval of the Council, administer or

participate in schemes for the purpose of-

(a) insuring bank deposits;

( b ) providing export credit insurance and guarantee; and

(c) providing guarantees for credit extended by financial institutions.

( 2 ) Subject to paragraph ( 3 ) , the Bank may, with the approval of the Coun-
cil, subscribe to, hold and sell shares of a corporation organised with the approval
or under the authority of the Participating Government for any of the purposes
specified in paragraph (1).

(3) The total value of the Bank's shareholdings in corporations to which
paragraph (2 ) refers shall not exceed 50 per cent of the General Reserve of the Bank.

(4) Subject to paragraph ( 5 ) the Bank may, with the approval of the Coun-
cil, establish special funds in order to facilitate the administration of the schemes
specified in paragraph (1) and may make annual contributions thereto out of its
profits.

(5) The Bank may, with the approval of the Council advance to any such
special fund such sums as may be required during a financial year:

Provided that such advances do not exceed its annual contribution to the
fund for that year.

(6) If the Bank ceases to administer any of the schemes specified in subsec-
tion (2 ) , the special fund relating to the particular scheme which the Bank has
ceased to administer, may be liquidated in such manner as the Bank, with the
approval of the Council, determines.

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28 CAP. 142) Eastern Caribbean Central Bank

43. The Bank shall not-

( 1 ) engage in trade or participate directly or indirectly in the owner-
ship of any financial, agricultural, commercial, industrial or other
enterprises, except to the extent provided in Article 42 paragraph
( 2 ) and paragraph ( 4 ) subparagraph (a) hereof;

(2) purchase or retain ownership of real estate except insofar as is
necessary for the conduct of its business and for the housing of its
officers and employees;

(3) make unsecured advances, whether by loans or overdrafts, except
as provided in Article 39;

( 4 ) make advances, whether by loans or overdrafts, secured otherwise
than as laid down in this Agreement:

Provided that-

(a) should any debts due to the Bank be in jeopardy, the
Bank may secure such debts on real or other property, and,
if the security is enforced, acquire and hold such property but
with a view to the sale thereof as soon as is practicable;

(b) subject to terms and conditions to be prescribed by
the Board, the Bank may grant advances to any of its officers
or employees:-

(i) for the purchase, construction or repair of one residen-
tial house for his personal use against the security of
the said house, and

(ii) for other purposes in an amount not to exceed during
the time that they are outstanding the annual remunera-
tion received by the borrower from the Bank;

( 5 ) accept shares as collateral security, except as provided in paragraph
(4) sub-paragraph (a) hereof.

44. In carrying out its functions the Bank shall be guided solely by technical
criteria and considerations and shall not discriminate in any aspect of its opera-
tions on political or other non-economic grounds.

45. (1) The Bank may make such regulations as may be required from
time to time for giving effect to the provisions of this Agreement.

(2) Regulations made by the Bank shall have full force and effect when all
steps have been taken as are necessary to give legal effect to them in each of the
territories. All regulations made by the Bank shall promptly be published in the
Official Gazette of each of the Participating Governments and notified to the public
in such other manner as the Bank shall decide.

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Eastern Caribbean Central Bank (CAP. 142 29

(3) In the event that any one of the Participating Governments shall, within
21 days of the date that a regulation becomes effective, lodge with the Council
a request for review, the Council shall promptly review the regulation in con-
sultation with the Bank and render its decision.

PART XI - ACCOUNTS AND STATEMENTS

46. The financial year of the Bank shall begin on the first day of April
and end on the thirty-first day of March:

Provided that the first financial year of the Bank may begin on a day after
the first day of April and end on the thirty-first day of March next following.

47. The accounts of all transactions of the Bank shall be audited by an
auditor appointed by the Bank from a list approved by the Council.

48. (1) Within three months of the close of each financial year the Bank
shall-

(a) transmit to each of the Participating Governments a copy of its annual
accounts certified by the auditor and such annual accounts shall be published
as soon as may be;

( 6 ) transmit to each of the Participating Governments and

publish a report on its operations during the year:
Provided that the annual accounts and the report may be published within

four months of the close of the first financial year of the Bank.

(2) The Bank shall, as soon as may be, make up and publish a return of
its assets and liabilities as at the close of business on the last business day of each
month and shall transmit a copy to each of the Participating Governments.

(3) The Bank shall include in the monthly return the proportion which the
value of the reserve of the external assets bears to its notes and coins in circulation
and other demand liabilities.

49. The Council may at any time require an auditor or board of audit
to examine and report on the accounts of the Bank, as a whole, or any aspect
of the Bank's operations and the Bank shall provide the auditor or board of audit
with all necessary and proper facilities for such an examination.

PART XI1 - IMMUNITIES, PRIVILEGES AND ARBITRATION OF
DISPUTES

50. (1) To enable the Bank to fulfil the functions with which it is entrusted,
the status, immunities and privileges set forth in this Article shall be accorded
to the Bank in the territory of each Participating Government.

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30 CAP. 142) Eastern Caribbean Central Bank

(2) The Bank, its property and its assets, wherever located and by whom-
soever held, shall enjoy immunity from every form of judicial process except to
the extent that it expressly waives its immunity for the purpose of any proceedings
or by the terms of any contract.

(3) Property and assets of the Bank shall be immune from search, requisi-
tion, confiscation, expropriation or any other form of seizure.

(4) The archives of the Bank shall be inviolable.

(5) To the extent necessary to carry out the provisions of this Agreement,
all property and assets of the Bank shall be free from restrictions, regulations,
controls and moratoria of any nature.

(6) The official communications of the Bank shall be accorded by Participating
Governments the same treatment as the official communications of other
Participating Governments.

(7) The Governor, the Deputy Governor, the appointed Directors, officers
and employees of the Bank:

(i) shall be immune from legal process with respect to acts performed
by them in their official capacity except when the Bank waives this
immunity;

(ii) not being local nationals, shall be granted the same immunities from
immigration restrictions, alien registration requirements and national
service obligations and the same facilities as regards exchange
restrictions as are accorded by Participating Governments to the
representatives, officials and employees of comparable rank of other
Participating Governments;

(iii) shall be granted the same treatment in respect of travelling facilities
as is accorded by Participating Governments to representatives,
officials and employees of comparable rank of other Participating
Governments.

(8) (a) The Bank, its assets, property, income and its business, shall be
immune from all taxation and from all customs duties in respect of goods
acquired by, or services rendered to it for its own use. The Bank shall also
be immune from liability for the collection or payment of any tax or duty
in respect thereof except when it resells a good acquired by it to a member
of the public.

( b ) No tax shall be levied on or in respect of salaries and emoluments,
including pensions and gratuities, paid by the Bank to the Governor, the
Deputy Governor and the appointed Directors, officers and employees of
the Bank.

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Eastern Caribbean Central Bank (CAP. 142

(c) No taxation of any kind shall be levied on any obligation or security
issued by the Bank, including any dividend or interest thereon, by whom-
soever held-

(i) which discriminates against such obligations or security solely because
of its origin; or

(ii) if the sole jurisdictional basis for such taxation is the place in which
it is issued, made payable or paid, or the location of any office or
place of business maintained by the Bank.

5 1. (1) Any dispute between the Participating Governments concerning
this Agreement or between the Bank and a Participating Government, shall be
submitted to arbitration by a tribunal of arbitrators appointed pursuant to paragraph
(2) of this Article.

(2) (a) If the dispute is between only two parties, each party shall be entitled
to appoint one arbitrator, and the two parties shall together appoint a third
arbitrator, who shall be the Chairman of the tribunal.

(6 ) If the dispute is between three or more parties, each party shall be
entitled to appoint one arbitrator and all the parties shall together appoint
an additional arbitrator, who shall be the Chairman of the tribunal.

(3) If, within thirty days of receipt of the request for arbitration, any party
has not appointed an arbitrator or if within thirty days of the appointment of
the arbitrators the parties have not appointed the third arbitrator or, as the case
may be, the additional arbitrator, any party to the dispute may request the Chief
Justice of the Eastern Caribbean Supreme Court, or in the event of his non-
acceptance for any reason, such other judicial authority as may be prescribed
by the Council, to make the required appointment.

(4) The procedure of the tribunal shall be fixed by the arbitrators, but the
Chairman of the tribunal shall have full power to settle all questions of procedure
in any case of disagreement with respect thereto. A majority vote of the arbitrators
shall be sufficient to reach a decision which shall be final and binding upon the
parties. The Chairman of the tribunal shall be entitled to vote, and in the event
of a tie, shall have a casting vote.

PART XI11 - WITHDRAWAL AND TERMINATION
52. (1) A Participating Government may withdraw from the Bank by giving

written notice of its intention to do so simultaneously to the Chairman of the
Council and to the Bank. The Chairman shall promptly notify the other
Participating Governments. The withdrawal shall take effect twelve months after
the notice is received by the Bank:

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3 2 CAP. 142) Eastern Caribbean Central Bank

Provided that at any time before the withdrawal becomes finally effective,
the Participating Government may notify the Bank in writing of the cancellation
of its notice of intention to withdraw.

(2) After withdrawal, a Participating Government shall remain liable for all
direct and contingent obligations to the Bank which it had incurred or to which
it was subject up to the date of withdrawal from the Bank but shall not incur
any liability for obligations resulting from operations of the Bank effected after
that date and shall cease to participate in the profits or losses of the Bank thereafter.

(3) Within three months from the date of receipt by the Chairman of the
Council of the notice of withdrawal, the Council shall determine the settlement
of accounts between the Bank and the withdrawing Government.

Such settlement shall take account of:

(a) notes and coins in circulation in the territory of the withdrawing
Government and any amount owing by the said Government to the Bank;

(b) the withdrawing Government's share in the General Reserve of the
Bank in accordance with the imputed equity interest formula contained in
paragraph (4 ) of Annex I to this Agreement;

(c) such other considerations as the Council may consider

53 . (1) The Council may by resolution adopted by a two-thirds majority
of all of its members terminate the operations of the Bank. After such termina-
tion, the Bank shall forthwith cease all activities; except those incident to the orderly
realization, conservation and preservation of its assets and settlement of its
obligations.

(2) No distribution of the assets of the Bank shall be made to Participating
Governments until all liabilities to creditors, including currency in circulation net
of Government debt, have been discharged or provided for and until the Council
by resolution adopted by a two-thirds majority of its members, shall have decided
to make such a distribution.

(3) The net assets of the Bank remaining, after the settlement under paragraph
(2) above, shall be distributed to Participating Governments in accordance with
the imputed equity interest formula contained in paragraph (4 ) of Annex I to
this Agreement.

PART XIV - FINAL PROVISIONS
54. (1) This Agreement shall enter into effect:-

(a) when it has been signed on behalf of all the Participating Govern-
ments; and

(6) when each Participating Government deposits with the Authority
an instrument of acceptance stating:-

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Eastern Caribbean Central Bank (CAP. 142 33

(i) that it has accepted this Agreement in accordance with its laws and
has taken all steps necessary to enable the Bank to operate, in
accordance with this Agreement, within its territory including the
enactment of such laws as may be necessary to satisfy the provi-
sions of this Agreement;

(ii) that the Participating Government agrees that, in respect of its
territory, the Bank shall exercise exclusive powers in respect ol'those
matters enumerated in Articles 18 paragraph (1), 19 paragraph (I),
20, 2 1, 33 and 34 of this Agreement.

(2) The Bank shall be deemed to have been established immediately upon
the performance of the provisions of paragraph (1) hereof by all the Participating
Governments.

(3) The Authority shall be deemed to cease to exist immediately upen the
establishment of the Bank.

(4) The East Caribbean Currency Agreement 1965 and all amendments thereto
shall cease and terminate on the establishment of the Bank.

(5) Each Participating Government shall take the necessary action to make
effective the provisions of this Agreement and enact such legislation as may be
necessary to give effect to the Agreement.

5 5 . An amendment to this Agreement may be proposed to the Council
by the Bank or by any Participating Government and shall be effective when it
is agreed to by all the Participating Governments and each Participating Govern-
ment deposits with the Bank an instrument stating that it has accepted the amend-
ment in accordance with its law and has taken all steps necessary to make it effective
in its territory.

56. After the entry into force of this Agreement, a territory other than
one listed in the Preamble may in the discretion of the Council be permitled to
become a member of the Bank by accession to this Agreement on such terms
as the Council shall determine by a two-thirds majority vote of the total number
of its members. Any such territory shall deposit, on or before a date appointed
by the Council an instrument of Accession with the Bank which shall notify such
deposit and the date thereof to the parties to this Agreement.

IN WITNESS WHEREOF the representatives of the Participating (hvern-
ments being duly authorised in their behalf, have signed this Agreement.

.DONE AT Port of Spain this 5th day of July 1983

Signed by Lester B. Bird
For the Government of Antigua and Barbuda

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34 CAP. 142) Eastern Caribbean Central Bank

Signed by M. Eugenia Charles
For the Government of The Commonwealth of Dominica

Signed by Maurice Bishop
For the Government of Grenada

Signed by John A. Osborne
For the Government of Montserrat

Signed by Kennedy A. Simmonds
For the Government of St. Christopher and Nevis

Signed by John M. Compton
For the Government of St. Lucia

Signed by R. Milton Cato
For the Government of Saint Vincent and the Grenadines

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Eastern Caribbean Central Bank (CAP. 142 3 5

ANNEX I to the Agreement
Establishing the Eastern
Caribbean Central Bank

FORMULA FOR SHARING OF THE PROFITS
OF THE BANK

(1) The distributable profits of the Bank shall be distributed among Participating
Governments according to the formula set forth below.
(2) The Bank in respect of each financial year shall determine the share of its
distributable profits attributable to returns on investments of its external reserves
used as backing for the currency as well as the distributable profits attributable
to other revenue-earning activities of the Bank.
(3) The share of distributable profits attributable to returns on investment of
its external assets shall be distributed between the Member States in proportion
to the respective amount of currency in circulation in each Member State. In
order to facilitate the determination from time to time of the currency in circula-
tion in all Member States, the Bank in its preparation of any new issue of currency
notes to be put into circulation at the date of commencement of this Agreement,
shall order that such notes be coded in such a manner as to permit the issue of
notes only of a particular code to a Member State, and any subsequent
determination of the currency in circulation in that State shall take account of
redemptions of notes of the particular code issued to a Member State, notwith-
standing that such notes may have been redeemed from elsewhere.
(4) The share of distributable profits attributable to other revenue-earning activities
of the Bank shall be distributable on the basis of the imputed equity interest of
each Member State, which shall be the proportion of profits provided for under
the formula in operation in 1969 adjusted to take account of the ratios determined
under paragraph (3) of this Annex, but so as to ensure that the aggregate of all
proportions is one.

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3 6 CAP. 142) Eastern Caribbean Central Bank

ANNEX I1 to the Agreement
Establishing the Eastern
Caribbean Central Bank

COMPENSATION ARRANGEMENT TO COVER
LOSSES DUE TO CHANGES IN EXTERNAL

VALUE OF THE EC DOLLAR

(1) In the first instance, compensation would be considered in respect of net
losses in the capital value of assets. On this basis, the following would apply:-

(a) Compensation would be considered in the first instance to cover overall
net losses in capital value of assets only where these are being managed by
the Bank as fiscal agent and depository of Participating Governments;

(6 ) Where net adverse movements in current payment commitments
occur, the increment in these can be met by the Bank, in whole or in part
and for a limited time period, both the proportion and time period to be
subject to the decision of the Council on the recommendation of the Bank
after detailed objective study;

(c) Where the net losses of capital value have occurred as a result of
a decision by the Council to vary the parity, as far as possible the objective
of the compensation should be to maintain the capital value of assets of those
few states which have sustained net losses;

(d) Where an involuntary devaluation has occurred, that is where either
the reserve currency has been altered in parity, or where the par value of
some other major currency has been altered, every effort should be made
to assist in maintaining the net capital value of the asset portfolio of each
Participating Government;

(e ) Prior to any action towards compensation in any of the situations
enumerated above, the Bank is required to make a full and careful deter-
mination of all gains and losses both in respect of its own portfolio and in
respect of the portfolios of Participating Governments, and to present this
determination to the Monetary Council with a recommendation from the
Board with respect to any compensation to be considered;

V) The provisions of Article (29) of the Agreement should be extended
to provide for assistance by the Bank in maintaining the capital value of
the external asset portfolios of Participating Governments as well as that of
the Bank itself, and this could be facilitated by an allocation by the Council
from the annual profits of the Bank to the "Revaluation Reserve Account".

(2) Additionally, compensation would be considered as compensatory financing
for payments deficits attributable to a change in the exchange value of the EC
dollar. In this case the following would apply:-

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Eastern Caribbean Central Bank (CAP. 142 37

(a) As in the case of the compensation for capital value losses, the basis
for compensatory financing would be a detailed study by ECCB, in collabora-
tion with the Participating Governments, of the impact of the change in parity
on the economy as a whole. The methodology of such a study would be
informed by appropriate internationally accepted guidelines for quantifying
the impact of changes in parity value of the currency.

( b ) Power should be granted to the Central Bank to establish special
funds for various purposes, and specifically to establish a special fund for
compensatory financing of the sort contemplated here in cases of changes
in the parity value of the currency, natural disasters or other situations
producing drastic declines in export earnings.

(c ) The special fund for compensatory financing should be based on the
Bank's own resources as well as on resources mobilised from outside of the
Bank. In some cases such outside funds may be made available in liquid
resources in advance to the Bank, while in other cases the Bank may negotiate
with other organisations for a line of credit or access to resources to be made
available in case the expected event occurs.

(4 In the case of compensatory arrangements resulting from deliberate
changes in parity, the IMF would no doubt be privy to the economic
circumstances justifying the changes and should stand ready to assist any
country deemed to be a net loser.

( e ) The funding mechanism should aim at providing short-term credit
for tiding over the initial period of adversity as well as funding to assist in
longer term adjustment of the economy.

Cf) The compensatory funding should be supplementary to any com-
pensatory financing of export fluctuations provided by the IMF and should
provide as far as possible for entitlement with minimum conditionality.

('g) The mechanism should provide for a combination of loans to
Participating Governments, liquidity expansion through additional credit,
and balance of payments assistance, the particular combination of facilities
depending on the results of the impact study and the wishes of the Participating
Government concerned.

(h) Where any Participating Government has suffered an adverse impact
as a result of the factors mentioned. s~ecia l consideration will be given to

, h .2

any request which it may make for temporary use of resources made available
by the Bank, and allocated to Member States but for the time being not utilised.

(4 The CGCED should be asked to give priority attention to the provi-
sion of resources for assistance under this head.

@ Once the studies which the Bank is required to undertake indicate
an adverse impact the compensatory procedures should be automatically
activated to the extent possible e.g. through the provision of increased liquidity
to the banking system and increased foreign exchange. Government borrow-
ing of course, will have to be the subject of a formal application.
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