The Minister of Finance in Vanuatu, Charlot Salwai, has sacked Tom Bayer from the Reserve Bank's board of directors.
Mr Bayer, who is a prominent accountant with ties to local political parties, is also a director of the European Investment Bank.
Mr Salwai says he terminated Mr Bayer from the board because of a conflict of interest.
He says the Reserve Bank Act clearly states that a board member cannot be a delegate of a commercial or financial institution at the same time.
The minister says as an agent of the European Investment Bank, Mr Bayer has to be removed from the Reserve Bank.