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Dispensing dead presidents

By Terry Joseph
August 09, 2000

ONE of the best-kept secrets in the financial sector has to be the recent imposition by the Central Bank of a restriction on the purchase of US dollars. There were no notices posted anywhere. However, last week Monday, when I tried to secure a mere US$1,000 for lawful use on a visit to Jamaica, the teller at a commercial bank advised that I could get no more than half that amount - "because of regulations."

Other similarly inconvenienced travelers later shared my amusement at the new regulations, no part of which prevented any of us from buying the other US$500 at the airport or, for that matter, going bank-hopping and netting thousands more notes with pictures of dead presidents.

It would have been at least comforting to discover that the Central Bank had a more thought-out and consequently enforceable regulation, instead of what now appears to be a knee-jerk response to a yet unrevealed crisis and a solution that punishes the lower classes almost exclusively.

Meanwhile, the very Central Bank continues to honour without restrictions, demands for any quantity of US dollars from credit card users, even if the purpose of their transactions are of no greater national significance than phone sex. A quick interpretation of the policy, therefore, is that the Central Bank may not feel obligated to us, but their responsibility to perverts, American Express, Visa and Mastercard is without question.

Worse, the concept of if you don't have a card, you don't stand a chance, is a clear indictment against little people. Many of these citizens may have the cash reserves, but could never obtain negotiable plastic, perhaps as a punishment for past sins as puny as a lapse in hire-purchase payments.

This comes at a time when families at all levels of society go on their annual vacations. It must appear unfair to some people to discover that others in the same queue are moving freely through the system, while they are subject to restrictions. In addition, it can do the Central Bank no good for locals to spread talk at their vacation destination about the state of the TT economy, albeit based only on the experience at the teller's window.

Mark you, for a while now, we have been hearing complaints, particularly from retail traders, about a US dollar squeeze, at a time when they are trying to make down payments on Christmas stock. Commercial bankers have also been insisting and with equal intensity, that the current exchange rates are fictitious.

The Central Bank has not responded to these claims with either arithmetic or education. What the officials there have done instead, is quietly design regulations, which it then imposes on us with equally surreptitious methodology, resulting in punitive measures against persons who are probably least culpable.

In a normal financial system, the commercial banks would have more foreign currency notes on hand than would the Central Bank. But since royalties for oil and gas are paid to government in US dollars, it gives the CB the required leverage. When there is a shortage, it is the Central Bank that intervenes to dispense dead presidents.

Business expansion and the demands of visionaries who wish to enhance their empires become the Central Bank's preferred customers because, in their system of economics, the long-term results of such macro-investments are likely to prove much more important than the sum of all other possible motives.

Social considerations must also inform Central Bank decisions, as no good governor would wish to preside over runaway inflation or a cost of living that makes life itself prohibitive. In the final analysis, it is an onerous responsibility and when you add the political dynamic of the ruling party not wanting any hint of fiscal instability to become evident, the governor has his work well defined.

The commercial banks do not allow themselves to lose. They affix surcharges and other hidden costs to ensure a buffer against any dramatic fluctuations in the currency exchange rate. Big business and dope dealers often find ways to circumvent little Central Bank regulations.

It is the man in the street, therefore, who now finds that he cannot access US dollars, after being told that there would be no more restrictions. The Central Bank governor must therefore understand that his officials have a responsibility to level with the people. He must be made to know that his signature on our currency notes does not automatically change ownership of the institution, nor does it debar the bank from communicating with us.

They must not sit in their tower, true only to the Bank's purpose as a regulatory body, making regulations for foreign exchange and imposing them with the same ease as it handle theater scripts.

When we say to tourists that the Central Bank is an imposing institution, we would like to offer a far more mature justification for describing it that way.

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