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Haiti Monetary and Exchange-Rate Policies
The Bank of the Republic of Haiti (Banque de la
République
d'Haiti--BRH) represented one of the few well-established,
public-sector institutions dedicated to economic
management.
Founded in 1880 as the National Bank of Haiti, the BRH--a
commercial bank--did not begin to act as a central bank
until
1934, when it became known as the National Republic Bank
of
Haiti. Since the 1930s, the bank has performed the
functions of a
central bank, a commercial bank, and a development-finance
institution; it also has been involved in other matters,
such as
the management of the Port-au-Prince wharf. As a central
bank,
the BRH also issued Haiti's national currency, the gourde
(G--for value of
gourde--see Glossary).
On August 17, 1979, new banking laws gave the BRH its
present
name and empowered it with the monetary-management
responsibilities associated with most central banks. The
BRH
subsequently became actively involved in controlling
credit,
setting interest rates, assessing reserve ratios, and
restraining
inflation. In the late 1980s, the BRH pursued generally
conservative monetary policies, and it employed high
cash-reserve
ratios in commercial banks as the key policy tool to
regulate the
money supply. In an effort to increase the dynamism of the
economy, the BRH sought to inject more credit into the
private
sector, particularly for long-term uses.
Since 1919 the Haitian currency has been pegged to the
United
States currency at the rate of five gourdes to the dollar.
Since
that same date, the United States dollar has served as
legal
tender on the island and has circulated freely.
Remarkably, the
value of Haiti's fixed exchange rate remained strong for
decades;
it fluctuated only with the movements of the currency of
the
United States, its main trading partner. Until the 1980s,
no
black market existed for gourdes, but unusually high
inflation
and large budget deficits eroded their value and brought
premiums
of up to 25 percent for black-market transactions in the
early
1980s. The black market subsided considerably in the late
1980s,
but the gourde's real rate of exchange remained above the
1980
level.
Data as of December 1989
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