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This study adopts an interest rate determination model to capture the degree of capital mobility in Barbados. Focus is given to factors which may have conditioned this level of mobility, with special emphasis on the formation of the Stock Exchange of Barbados in 1987. Results show that in spite of the capital controls in this island economy, capital is relatively mobile - to indicate the sensitivity of the domestic system to external influences. As a result, the scope for monetary policy independence is limited.