CARICOM Traveller’s Cheques Facility (1980-1993)

The original Treaty of Chaguaramas had prescribed that member states explore ways of harmonizing their monetary, exchange rate and payments policies in the interest of smooth functioning of the Common Market. Up to the late 1970s the various CARICOM countries established a compensation procedure to favour the use of the member states currencies. The procedure was aimed at ensuring monetary stability and promoting trade development. This monetary compensation scheme (or Intra-Regional Payments Scheme) was at first bilateral, but although it worked fairly well for about eight years it was limited, cumbersome and unwieldy as each participant had to keep individual accounts for all the other participants and the accounts had to be individually balanced at the end of each credit period. In addition, the bilateral arrangements did not produce meaningful economies in the use of foreign exchange. The system finally became multilateral in 1977 and was called the CARICOM Multilateral Clearing Facility (CMCF). The CMCF was supposed to favour the use of internal CARICOM currencies for transaction settlement and to promote banking cooperation and monetary cooperation between member states. Each country was allowed a fixed credit line and initially the CMCF was successful enough that both the total credit line and the credit period were extended by 1982. With the CMCF in place, intraregional trade doubled between 1978 and 1981, and the use of the credit facility of the CMCF expanded from US$40 million to US$100 million. However, the CMCF failed shortly thereafter in the early 1980s due to Guyana’s inability to settle its debts and Barbados being unable to grant new payment terms

In the period since suspension, the only activities which took place under the aegis of the CMCF were the rescheduling the obligations of the debtor (in the case of the CMCF, there was only one major debtor owing in excess of US$160 million to the Facility) and the activities of the Caricom Travellers Cheques (CTC) Facility. The Caricom Traveller’s Cheques Facility was introduced on August 1, 1980 and authorised dealers were allowed to issue only Caricom traveller’s cheques to residents travelling within Caricom countries other than Jamaica.[180] Jamaica later fully joined the scheme in the mid-1980s and the cheques were issued in Trinidad and Tobago dollars in denominations of 10, 20, 50, and 100. The Traveller’s Cheques facility was administered by the National Commercial Bank of Trinidad and Tobago and usage had fluctuated in the 1980s but between 1986 and 1991 it had average annual sales and encashment levels in excess of US$3 million.[179] Following the removal of exchange control in most territories towards the end of the 1980s,[178] the devaluation of the Trinidad & Tobago dollar and the introduction of floating exchange rates in Guyana (1987), Jamaica (1991) and Trinidad & Tobago (April 1993) the annual average sales and encashment levels for the CTC facility first showed a marked decline to under US$1.6 million in 1991 and then under US$1 million in 1992. The Caricom Traveller’s Cheques Facility was officially ended in December 1993with cheques issued before December 31, 1993 able to be cashed for a period of one year at commercial banks and thereafter only at the Central Bank of Trinidad and Tobago

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