WILLEMSTAD – Public debate in Curaçao often assumes that the Central Bank can actively steer inflation, employment, or economic growth. According to the Bank itself, that expectation misunderstands the nature of the island’s monetary system.
Unlike central banks in countries with floating exchange rates, Curaçao operates under a fixed peg to the US dollar. That choice fundamentally limits monetary autonomy. The Bank does not have an inflation target, nor does it pursue employment objectives. Its sole primary responsibility is maintaining external stability by defending the exchange rate.
Because Curaçao imports most of its goods, inflation is largely driven by external price developments, particularly in the United States. Domestic monetary tools cannot offset rising global energy prices or imported food inflation without threatening the currency peg itself.
Attempts to use monetary policy to stimulate growth would, in this framework, risk higher imports, reserve losses, and ultimately pressure on the exchange rate. The Central Bank warned that such policies, while politically attractive, would undermine confidence and could force a devaluation — a scenario historically associated with sharp inflation spikes and loss of purchasing power.
In short, the Bank argues that monetary restraint is not a lack of ambition, but the price of stability in a dollar-anchored economy.
