WILLEMSTAD - The balance sheet total of the Central Bank of Curaçao and Sint Maarten exceeded the 5 billion guilder mark at the end of May 2021. On May 31, the CBCS recorded 5,046.2 million in assets.
This is apparent from the Abridged Balance Sheet plus explanatory notes published recently. A month earlier, as of April 30, 2021, 4,935.3 million was still listed. On the assets side of the balance sheet, both the item 'Foreign exchange' and the item 'Gold' increased in May. The foreign exchange reserve grew by 11.3 million, which was mainly the result of the transactions of the commercial banks on Bonaire and the transfer of funds from abroad by pension funds.
At the end of May, the foreign exchange amounted to 3,015.4 million (more than 3 billion). Over the past year and a half, the exchange rate has grown mainly due to Dutch liquidity support to the Caribbean countries in connection with the corona crisis. The item 'Gold' on the assets side of the balance sheet increased by 99.6 million in May: "Due to the higher market value at the balance sheet date compared to the end of April 2021".
It is therefore not the case that the gold stock has increased, but the international market value has increased in May. The gold price fluctuates constantly. At the end of May, the value of the gold stock was 1,429.7 million (1.4 billion). The increase in the item 'Capital and reserves' on the liabilities side of the CBCS balance sheet was related to the higher market value of the gold stock.
During the month of May 2021, the Central Bank in Scharloo has maintained the percentage of the mandatory reserve at 19 percent. However, the number of required reserves decreased by 61 million due to a decrease in the basis on which it is calculated. This basis is domestic debt minus long-term deposits. The required reserves amounted to 1,422.4 million (1.4 billion) on the balance sheet date.
At the weekly auctions of the so-called Certificates of Deposit (CDs), the banks only registered for the maturing amounts of CDs. As a result, the number of outstanding CDs remained unchanged, namely 269 million. Regarding the base money supply – defined as the sum of the banknotes and coins in circulation and the current account balances of the commercial banks with the CBCS – the Central Bank reports that it increased by 99.9 million.
“Due to an increase in the current account balances of the commercial banks (+95.7 million) and in the banknotes and coins in circulation (+4.2 million.” The current account balances amounted to 797.6 million on May 31, while 543.3 million worth of notes and coins are in circulation.
“The increase in current account balances was mainly the result of the decrease in the mandatory reserve and the transfers of the government of Sint Maarten and pension funds from their accounts with the Central Bank to their accounts with the commercial banks,” according to the explanation of the CBCS.
“The transfer from Gi-Ro Settlement Holding (GSH nv) to Girobank nv in connection with the settlement of this institution also contributed to the increase in current account balances.” The item 'Liabilities to non-residents' increased by 7.9 million, mainly due to the transactions of the commercial banks on Bonaire in favor of their accounts with the Central Bank of Curaçao and Sint Maarten.
However, the increase in this item was mitigated by the payments made by the Dutch Ministry of Finance to the General Pension Fund Curaçao (APC) and the General Pension Fund Sint Maarten (APS) in connection with annuity loans granted in the context of the debt restructuring by the Dutch State were acquired and are in the portfolios of these institutions.”
The net position of governments at the CBCS deteriorated by 2.7 million in May due to a decrease in deposits from Sint Maarten (-5.3 million), moderated by an increase in deposits from Curaçao (+2.6 million). The decrease in the deposits of the Sint Maarten government was mainly the result of transfers to accounts with the commercial banks related to the provision of emergency support to the groups in society most affected by the corona crisis.
"The interest payments on bonds held by the Dutch State have also contributed to the decline in Sint Maarten's deposits." The increase in Curaçao's deposits was due to the transfer by the Central Bank of the collected license fees for the month of April 2021, moderated by interest payments to the Dutch State.
Furthermore, the item 'Liabilities to other residents' decreased by 31.5 million, which was mainly the result of the transfers from GSH nv to Girobank nv. This is what the CBCS reports in an explanation of the Abridged Balance Sheet.