On September 17, 2026, the Centrale Bank van Curaçao en Sint Maarten (CBCS) decided to
increase the pledging rate1 to 4.50%, while maintaining the reserve requirement unchanged at
18.50%. The decision was taken against the backdrop of an expected decline in the monetary
union’s foreign exchange reserves in 2026, continued uncertainty surrounding international
trade policies, and ongoing geopolitical tensions. It also follows the U.S. Federal Reserve’s
decision in September to raise its policy rate by 25 basis points. The CBCS also adjusted its
Certificates of Deposit (CD) program. The changes are aimed at reducing the costs of
absorbing excess liquidity in the banking system while strengthening the effectiveness of
monetary policy. The CBCS will continue to monitor domestic and international economic
developments and adjust its monetary policy when necessary.
While gross official reserves increased by Cg 468.1 million through August 31, 2026, they are
projected to decline by approximately Cg 332 million in 2026. This reversal is mainly due to
withdrawals by the Dutch State from its account at the CBCS and lower net capital transfers. The
Dutch State’s withdrawals represent the repatriation of funds accumulated in its account at the
CBCS, primarily from interest and principal payments made by the governments of Curaçao and
Sint Maarten. Combined with higher projected imports of goods and services, the lower level of
reserves is expected to reduce the import coverage from 4.7 months at the end of 2025 to 4.3
months in December 2026. Nevertheless, the import coverage is projected to remain above the
3-month benchmark.
Although gross official reserves are projected to decrease, the monetary union’s foreign exchange
position is expected to remain strong, contributing to a stable external position. At the same time,
downside risks remain. In addition to geopolitical tensions and possible renewed disruptions in
energy markets, global trade tensions and uncertainty surrounding tariff policies could weaken
external demand, raise import costs, and increase inflationary pressures in Curaçao and Sint
Maarten. Moreover, the prospect of more restrictive U.S. monetary policy, if inflationary pressures
persist, could lead to tighter global financial conditions, raising external financing costs and
limiting access to financing for Curaçao and Sint Maarten.
Against this backdrop and following the Federal Reserve’s decision to raise the target range for the
federal funds rate to 3.75% – 4.00%, the CBCS increased its pledging rate to 4.50%. This maintains
a 50-basis-point spread above the federal funds rate. The Federal Reserve’s decision reflected
continued inflationary pressures and heightened uncertainty surrounding the economic outlook.
