In addition to the positive economic factors driving the resumption of capital inflows – the sound public debt position and high commodity prices – the high inflation rate and growth in unit labour costs were driving up the real effective exchange rate. The current account deficit remained high as a result of growth in gross domestic spending exceeding growth in domestic production.
The Central Bank of Barbados also provides liquidity support to domestic banks but there is no reason to expect that this will be called upon as our banks (except for possible losses in value on their US dollar securities) have not been  BIS Review 125/2008  1  directly impacted by the developments in the US market.