CBCS gold sale fuels debate over future of the Guilder

WILLEMSTAD--A new round of debate has opened over the Central Bank of Curaçao and St. Maarten’s reserve strategy after renewed attention to its 2024 decision to sell part of its gold holdings and move the proceeds into U.S. government bonds. The issue has taken on added weight as the Caribbean guilder, introduced on March 31, 2025, remains tied to confidence in the monetary union’s foreign reserves.

At the center of the discussion is an analysis by economist and former Court of Audit auditor Luigi A. Faneyte, who argues that the real issue is not whether gold is better than bonds, but whether the current reserve mix can withstand external shocks and protect long-term confidence in the currency. His analysis comes as public interest grows over how the CBCS is managing assets that underpin the guilder’s peg to the U.S. dollar.

The CBCS confirmed on January 22, 2024, that it sold 30 percent of its gold reserves, equal to 125,000 fine troy ounces, and reinvested the proceeds in fixed-income securities, specifically U.S. Treasury bonds. The bank said the transaction was designed to improve resilience, increase revenues, and strengthen its ability to absorb financial shocks. It also said the move would support its results and targeted annual dividend payments to Curaçao and St. Maarten under Article 40 of the Bank’s Charter.

The bank has maintained that the sale changed only the composition of the reserves, not their total size. CBCS President Richard Doornbosch said at the time that the transaction had no impact on the stability of the guilder’s peg to the U.S. dollar and that the peg remained secure.

CBCS also disclosed that the shift had been under consideration for some time. According to the bank, it first examined the possibility in 2021, and an IMF review that year found the CBCS held a significantly larger gold position than peer regional central banks. The bank said an updated IMF analysis in November 2023 supported converting part of that gold into fixed-income securities, arguing that such a move would reduce market risk because bond prices are generally less volatile than gold prices.

Even so, the reserve shift has not ended concerns, it has changed them. Gold is volatile, but it is widely treated as a hedge during periods of financial stress. Bonds, while generally safer from a credit perspective, remain exposed to interest-rate risk, especially in a period of shifting U.S. monetary policy. For critics, the question is whether replacing part of a traditional safe-haven asset with income-producing securities leaves the monetary union better protected, or more concentrated in a different type of exposure.

That concern matters more now because the Caribbean guilder entered circulation on March 31, 2025, replacing the Netherlands Antillean guilder in a phased transition. The credibility of that new currency depends heavily on the strength and liquidity of the reserves standing behind it.

Recent CBCS data indicates the reserve position remains above traditional adequacy thresholds. In its June 2025 Monetary Policy Report, the bank projected that average import coverage would rise to 4.7 months in 2025, up from 4.4 months in 2024, remaining well above the commonly used three-month benchmark.

Those figures suggest the reserve base remains intact for now. But the renewed debate is not centered only on current reserve levels. It is focused on whether the reserve structure is durable enough to absorb several pressures at once, including higher U.S. interest rates, weaker bond prices, external trade disruptions, or broader financial volatility. For small, import-dependent economies like Curaçao and St. Maarten, that is not a technical issue alone, it is directly tied to exchange-rate credibility, price stability, and public trust.

The debate is likely to continue as economists, policymakers, and the public weigh whether the CBCS has struck the right balance between liquidity, returns, and long-term protection for the currency union.

𝘙𝘦𝘱𝘰𝘳𝘵𝘦𝘥 𝘪𝘯 𝘱𝘢𝘳𝘵 𝘣𝘺 𝘊𝘶𝘳𝘢ç𝘢𝘰 𝘊𝘩𝘳𝘰𝘯𝘪𝘤𝘭𝘦.

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