CBCS keeps monetary policy unchanged as global risks grow

GREAT BAY--The Central Bank of Curaçao and St. Maarten, CBCS, has decided not to change its monetary policy for now, saying it wants to remain cautious because of growing uncertainty in the global economy, especially from the conflict in the Middle East.

In simple terms, the central bank is saying this: things are still stable at the moment, but there are enough risks out there for it to be careful rather than make big changes. The bank said its foreign reserves remain strong, which means the monetary union still has a solid buffer to pay for imports and protect the value of its currency. Up to March 13, 2026, reserves had increased by Cg. 102.2 million, and import coverage stood at 5.3 months, well above the usual minimum benchmark of three months.

The main concern raised by CBCS is the possibility that the conflict in the Middle East could disrupt global shipping and energy supplies, especially if the Strait of Hormuz were to close for any length of time. If that happens, oil prices could rise sharply, and that would likely push up freight, insurance, and transportation costs as well. For Curaçao and St. Maarten, that could mean higher prices in stores, weaker buying power for consumers, more expensive travel, and possible pressure on tourism.

CBCS outlined two possible risk scenarios. In the first, if the Strait of Hormuz were effectively closed for three months, oil prices could average about US$100 in 2026. Under that scenario, the monetary union’s financial position would weaken, reserves would fall instead of rise, and import coverage would drop from the expected 5.2 months to 4.4 months. In a more severe six-month disruption scenario, oil prices could average around US$150 in 2026, reserves could decline by Cg. 246.8 million, and import coverage could fall to 3.8 months.

The bank also warned that the Middle East is not the only issue. It pointed to the war in Ukraine, tensions involving Venezuela and the United States, and uncertainty over global trade policy, especially U.S. tariffs, as other risks that could slow investment and economic activity.

Because of all this, CBCS decided to leave its main lending rate unchanged at 4.25 percent and also kept the reserve requirement for banks unchanged at 18.50 percent. It said it will continue using its weekly certificate of deposit auctions to keep more liquidity at home and help protect the foreign exchange position of the monetary union.

The overall message from CBCS is that the economy is still in a solid position for now, but the risks are real, and if global conditions worsen, people in Curaçao and St. Maarten could feel it through higher prices, more expensive travel, and slower economic activity.

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