Bahamas

Bahamas became independent from the UK in mid-1973, with its currency already pegged to the USD, and maintained that arrangement throughout the period.

YearsTargets and attainmentClassification
1974-2017currency fixed at par to USD from February 1973, USD also used; open, liberal economy which trades mainly with the US; established tax-haven with many foreign-affiliated banks providing offshore financial services; low-volume low-premium investment currency market, with exchange controls on residents’ capital outflows which to some extent insulate domestic monetary conditions; previous monetary authority replaced mid-1974 by new central bank with authority to set interest rates, cash and liquid asset ratios and credit controls, to rediscount Treasury bills and government bonds, and to lend to government within limits; monetary policy is de facto subordinate to exchange rate peg and largely passive (with inflation moving in line with dominant trading partner US); banks typically hold excess reserves; Treasury bill issues geared to financing deficits, no secondary markets for Treasury bills or bonds, few interbank transactions, no OMOs for liquidity-management purposes; fiscal deficits vary but effects on monetary growth typically contained, mainly by credit controls and moral suasion, supported by infrequent discount rate changes, with focus on maintaining or raising forex reserves; from mid-1990s efforts to reverse decline in role of offshore financial sector; 2002 some relaxation of exchange controls; moves towards indirect monetary instruments discussed in mid-2000s, but shelved with GFC in favour of greater emphasis on financial stabilityaugmented exchange rate fix AERF

Selected IMF references: RED 1974 pp20-2, 38; RED 1977 pp21-4; RED 1978 pp26-7; SR 1982 pp5-6, 9; RED 1983 pp30-2; SR 1983 pp6-8;  SR 1985 p5; RED 1986 p19; SR 1988 pp5-6; SR 1992 pp5-6; SR 1994 pp3-4; RED 1996 pp14-22; SISA 1999 pp5-13; SR 2001 p7; SR 2003 pp4, 9, 17-18; SR 2005 pp33-42, 44-5; SR 2007 pp16-18; SR 2014 p15.