5. the case of aruba only a few months prior to status aparte in 1986, the island council of aruba, after many studies and discussions, decided to institute its own central bank and issue its own currency, the aruban florin, with the same nominal value as the antillean guilder, and that is 1. 79 florin to one us dollar. the prime reasons behind this decision were the perceived complexities within a monetary union with the netherlands antilles hen adopting the antillean guilder and the loss of monetary independence in a fully dollarized economy. for those who are not fully familiar with these issues, i must point out that the decision of the aruban authorities to peg the aruban florin to the us dollar is a unilateral one, and is anchored in the central bank ordinance, the ordinance governing foreign exchange transactions, and the state decree value of the florin. in other words, it takes a political decision to change the exchange rate of the aruban florin vis - a - vis the us dollar. just as the netherlands antilles, aruba has been able to maintain this peg, meaning that we have experienced an unchanged rate of exchange with the us dollar since 1971. starting from 1986, our economy has had an average annual per capita real growth rate of 2. 3 percent, a moderate inflation ( on average 4. 0 percent ), a debt to gdp ratio of 44. 1 percent, which is still manageable, and a level of international reserves that is more than adequate ( currently at 8. 7 months of import payments ). in the last two decades, aruba has made great economic progress : we chose to invest in tourism and, currently, aruba is one of the most popular tourism destinations in the caribbean. two out of three of our visitors are americans, which does not make it strange to hear that the us dollar is a widely accepted means of payment in aruba. these economic and institutional developments demonstrate that it is possible to issue and manage a local currency successfully in a small open economy like ours. 6. the case of the netherlands antilles now, i would like to turn to the case of the netherlands antilles. i know that dollarization of the antillean economy has been discussed before. as early as 1986, de boer and kamps investigated the possibilities of dollarization in the netherlands antilles in a study initiated by the university of the netherlands antilles. 1 the authors advocated prudence with

jeanette r semeleer : to dollarize or not to dollarize – the central bank of aruba ’ s point of view speech by ms jeanette r semeleer, president of the central bank of aruba, at the conference “ opportunities and risks of dollarization for the dutch caribbean ”, organized by the minister of finance of the netherlands antilles, curacao, at the bank of the netherlands antilles, willemstad, 24 august 2009. * * * ladies and gentlemen, good morning! 1. introduction i am truly honored to have been invited to speak to such a distinguished audience on a topic that touches everyone ’ s wallet, and that is dollarization. with dollarization in this context i refer to as the use of the us dollar as the exclusive legal tender in a country. i must admit that at the centrale bank van aruba ( cba ), although we have regular bilateral meetings, we have been quite surprised with the recent consideration of the bna to replace the netherlands antillean guilder for the us dollar as the legal tender for the island of curacao on a very short term. in view of the far - reaching consequences of such a change, possibly for aruba too, i highly applaud mrs. de lanooy ’ s initiative to organize a forum of experts, which could enlighten us further on a rather complicated issue. at the end, it is of crucial importance that the required political decision is based on a thorough assessment of the opportunities and risks associated with dollarization. in the next few minutes i will first clarify my view regarding dollarization in general and, subsequently, i will briefly focus on the special case of small - island economies like aruba and the netherlands antilles. 2. dollarized countries countries that have dollarized their economy can broadly be divided into two categories. the first group consists of countries, which are generally small and have strong political and / or economic ties with the country that issues the currency they use. various island states in the caribbean ( virgin islands ) and in the pacific ( guam, micronesia ) belong to this group, which are in economic size comparable with aruba, curacao and st. maarten. other examples include the mini states in europe like andorra and monaco, which use the euro as legal tender. all in all, some thirty countries or territories can be classified in this category. the second group of countries is much smaller. it consists of economies that are