(Trinidad Express) President Anthony Carmona has expressed concern about the shortage of US dollars in the local financial system, saying if it is not caused by consumer spending then the Central Bank must ensure the currency is not ending up in the wrong hands.
“And what of the ever-contentious matter of the shortage of US dollars on the market, which has fuelled fiery comment and speculation of factors, including capital flight and concern that the economy is in trouble? And if it is a possibility that this dearth may not altogether be due to ‘new patterns of consumer spending’, then the Central Bank has a manifest role and responsibility to ensure that the injected or otherwise transacted US dollars are not absorbed by illegal activities such as the financing of terrorism, money laundering and drug trafficking.
“We cannot be impervious to the experiences of developed countries and transnational crime in that regard,” said the President.
Carmona was speaking during the Central Bank of Trinidad and Tobago’s (CBTT) 50th anniversary celebrations, held at Hyatt Regency in Port of Spain on Saturday night.
While commending the Bank on its “step in the right direction” in recently signing a memorandum of understanding with the Financial Intelligence Unit and the Securities and Exchange Commission for the exchange of information on suspicious illegal activities, he said the Bank must ensure financial institutions are compliant.
“If they are not, that sanctions be imposed in the context of implementable legislation. Responsibility remains key,” he said.
Carmona said the Central Bank should also take an additional look at and propose legislative reform which targets banks.
“The fact that bank charges and interest rates are so exorbitant needs to be examined by the Central Bank in the context of creating a sense of parity and fairness between bank and customer.
“As it stands, banks are viewed as corporate entities that stifle the fiscal capacity of the man on the street. If the CBTT is promoting financial inclusion, it should consider including the legislative reform necessary for fair and equitable dealings between bank and customer as they relate to credit cards,” he added.
He said far too many harmful practices permeate the local banking industry, to the point that citizens will continue to feel disadvantaged by the banking sector.
“The Central Bank must step up to its role in doing away with the lazy economics which has for far too long engaged our banks at the expense of its customers,” Carmona stated.
Touching on the the issue of energy, he said many are still in denial that oil and gas reserves will not last forever.
He noted that citizens must not be naive to the current decline of oil prices on the global market and pointed to the fact that reputable investment banks have stated that the price of Brent crude oil will drop to US$45 a barrel in 2015.
“Our economy needs to anticipate the future ramifications of this decline and it is the duty of the Central Bank to exercise the relevant due care and diligence and map out viable solutions to deal with what we all hope will not become another crisis.
“The Central Bank has a key role to play in intervening to ensure that banks do their part in fostering and encouraging activities which could sustain the economy by, for example, giving preferential loans, grants and interest rates to green energy sectors, social enterprises, innovative and ethical businesses,” the President said.
Carmona applauded the efforts of the Central Bank in repositioning itself to prepare for the threats of future challenges, which he said are inevitable in any financial environment.
He added that the Bank’s achievement of 50 years is no small feat.
The President also congratulated the Central Bank on the launch of the nation’s $50 polymer bill, saying this type of innovation gives him confidence that the economic stability of the country’s future is in good hands.
However, he raised the point that the Central Bank should consider, “as an aspect of future policy”, whether there is need for the one cent and five cent pieces.
“Unfortunately, some of our monetary denominations find little utility in our current economic culture and I often wonder about the comparative costs of producing same. I speak broadly of our one and five cent pieces. Other than the token 99-cent deal that we may find at a time when businesses are competing for customers, do we really use these coin pieces for anything?” he asked.
He made reference to the US Mint’s annual report 2010 which said penny and nickel coins were produced at a loss of US$42.6 million, nearly double the fiscal year 2009 loss of US$22 million.
He said in 2014, given the rise of copper, a one cent piece cost the United States $1.83 cents to be minted.
“Let us be blunt, ladies and gentlemen, you cannot buy anything in Trinidad and Tobago for one cent or five cents.”