An­tho­ny Wil­son

?The last Sun­day Guardian ed­i­to­r­i­al which was head­lined, Cau­tion re­quired on forex state­ments chal­lenged a com­ment made by Min­is­ter of Trade, In­dus­try, In­vest­ment and Com­mu­ni­ca­tion Vas­ant Bharath at a man­u­fac­tur­ers' func­tion last week that the amount of for­eign ex­change held in lo­cal bank ac­counts to­talled close to US$5 bil­lion.

"It is a lot of mon­ey and it has de­vel­oped over a pe­ri­od of sev­er­al years. It is one of the is­sues why there isn't enough for­eign ex­change in the econ­o­my as there ought to be," ac­cord­ing to a di­rect quote at­trib­uted to Min­is­ter Bharath.

To say that there was US$5 bil­lion in held in lo­cal, for­eign-cur­ren­cy ac­counts is a gross ex­ag­ger­a­tion as the amount of mon­ey held in the for­eign cur­ren­cy ac­counts of lo­cal banks to­talled US$3.6 bil­lion at the end of Jan­u­ary.

That's the fig­ure that is on the Cen­tral Bank Web site and that is the fig­ure that a Cen­tral Bank spokesper­son last week con­firmed was the cor­rect and most re­cent amount.

And, as the ed­i­to­r­i­al help­ful­ly point­ed out, the dif­fer­ence be­tween US$5 bil­lion and US$3.6 bil­lion is 37 per cent.

The Sun­day Guardian opin­ion al­so not­ed for­eign cur­ren­cy de­posits had been re­mark­ably sta­ble over the last five years: at US$3.80 bil­lion in Jan­u­ary 2010, and US$3.65 bil­lion with a range of be­tween US$3 and US$3.9 bil­lion.

Com­mer­cial banks' TT dol­lar de­posits on the oth­er hand, have grown from $74.26 bil­lion to $101.9 bil­lion in that pe­ri­od.

Hav­ing been called out on the is­sue, the ap­pro­pri­ate thing for the min­is­ter to do would be to is­sue an apol­o­gy for mis­lead­ing the na­tion on a sen­si­tive is­sue.

But, like God's face, a min­is­ter apol­o­gis­ing for an in­ac­cu­rate or mis­lead­ing state­ment, is not some­thing that any of us should ex­pect to see.

Clear­ly, the ev­i­dence does not sup­port the propo­si­tion that the prob­lems that or­di­nary T&T cit­i­zens and res­i­dents have in ac­cess­ing for­eign cur­ren­cies is as a re­sult of the ac­cu­mu­la­tion of de­posits in com­mer­cial banks.

But, if not the ac­cu­mu­la­tion of for­eign cur­ren­cy de­posits, what is caus­ing the sup­ply/de­mand im­bal­ances from time to time in the for­eign ex­change mar­ket?

In an in­ter­view with Fazeer Mo­hammed on TV6's Morn­ing Edi­tion on De­cem­ber 22, 2014, Cen­tral Bank Gov­er­nor Jwala Ram­bar­ran ad­mit­ted that this coun­try's reg­u­la­tor of banks re­ceives in­for­ma­tion on their for­eign ex­change in­flows and out­flows on a dai­ly ba­sis.

If this is so–and there is no rea­son to dis­be­lieve the Gov­er­nor on an is­sue like this–it means that the Cen­tral Bank knows by the end of the work­ing day the ex­tent of de­mand for, and sup­ply of, for­eign ex­change at T&T's com­mer­cial banks.

It means that the Cen­tral Bank knows the na­ture of the de­mand–for ex­am­ple, how much is cash, cheques or wire trans­fers. And it means that the Cen­tral Bank knows the com­po­si­tion of the de­mand–for ex­am­ple, how much is go­ing to pay off cred­it cards, how much to pay bills for re­tail­ers and how much for ed­u­ca­tion, va­ca­tion or in­vest­ments.

If the Cen­tral Bank has this in­for­ma­tion about the de­mand for for­eign cur­ren­cies, it should al­so be in a po­si­tion to know what the un­met de­mand is at the end of each work­ing day.

And one of the more in­ter­est­ing things that the Gov­er­nor said in that in­ter­view is that the Cen­tral Bank has made an arrange­ment to step in­to the breach if any com­mer­cial bank falls short.

Said Ram­bar­ran: "What we have done as a Cen­tral Bank is to step in and we now have US cash that would be avail­able as a stop-gap mea­sure in the event that the bank­ing sys­tem is run­ning low on ac­tu­al US cash.

"It should not be an is­sue that you walk in­to your bank branch and ask for ac­tu­al cash and they tell you they don't have any.

"We have al­so asked the banks to lift their branch lim­its to a high­er amount to ac­com­mo­date that de­mand.

"Be­cause we are there to meet the short­fall, you should not be turned away."

So here is the Cen­tral Bank Gov­er­nor say­ing that or­di­nary T&T cit­i­zens and res­i­dents should be able to walk in­to their bank branch and, be­cause the Cen­tral Bank is there to meet any short­fall, no cus­tomer in this coun­try should be turned away.

Yet, every­day I hear com­plaints from peo­ple–big and small–that there are is­sues with ac­cess to for­eign ex­change...even in­clud­ing ac­cess­ing mon­ey in their own for­eign cur­ren­cy de­posit ac­counts.

Ques­tioned on April 20 by CNC3 busi­ness jour­nal­ist, Judy Kan­hai, on whether it was le­gal for a bank to de­ny a hold­er of a for­eign cur­ren­cy de­posit ac­count ac­cess to their funds, Re­pub­lic Bank's deputy man­ag­ing di­rec­tor, Nigel Bap­tiste, wrote: "The on­ly thing I can think of is if the in­di­vid­ual want­ed the funds paid to him/her in cash and the bank did not have that quan­tum of cash avail­able at the point in time.

"If the per­son want­ed the funds wire trans­ferred some­where, and that was not pos­si­ble, that would be of greater con­cern to me and it would def­i­nite­ly re­quire fur­ther in­ves­ti­ga­tion. I can­not read­i­ly think of an ex­pla­na­tion for that."

Asked the same ques­tion, Sco­tia­bank CEO Anya Schnoor said: "Any de­pos­i­tor has im­me­di­ate ac­cess to funds in their USD ac­counts, in the form of a wire or draft. How­ev­er a de­pos­i­tor may not be able to gain ac­cess to same funds via cash if his re­quest is large and out­side of his nor­mal ac­count ac­tiv­i­ty.

"This can be looked at from dif­fer­ent per­spec­tives:

�2 We do not print USD in coun­try, and USD cash has to be im­port­ed, which af­fects avail­abil­i­ty

�2 Hold­ing ex­cess US$ cash is cost­ly and pos­es se­cu­ri­ty risks to in­di­vid­ual branch­es

- KYC (Know Your Cus­tomer) � re­quest for large vol­umes of USD cash raise con­cerns from an­ti-mon­ey laun­der­ing per­spec­tives.

- We en­cour­age cus­tomers to plan for cash needs in ad­vance and ad­vise their branch so rel­e­vant plans can be put in place to meet their needs."

The rea­sons why com­mer­cial banks can­not meet their le­gal oblig­a­tions to pro­vide on-de­mand ac­cess to mon­ey in for­eign cur­ren­cy ac­counts are, of course, quite in­ter­est­ing.

But if the Cen­tral Bank has made clear that it is pre­pared to sell US cash to com­mer­cial banks that run short, no bank should ever tell an or­di­nary cus­tomer wish­ing to buy US$5,000 for a va­ca­tion that it does not have the quan­tum of cash avail­able to sell them.

What they should say is that we do not have the cash at the branch to­day but, be­cause the Cen­tral Bank has as­sured it will cov­er any cash short­fall, we will have it to­mor­row.

If the com­mer­cial banks can­not put such arrange­ments in place, then this is some­thing that the Cen­tral Bank should con­sid­er do­ing.

Are com­mer­cial banks hoard­ing US dol­lars?

It seems to me that lo­cal com­mer­cial banks may seek to gath­er up as much for­eign cur­ren­cy as pos­si­ble if they are do­ing large loans, large ac­qui­si­tions or syn­di­ca­tions.

Let's say, for ex­am­ple, that Bank A is about to make a large US$ loan to a lo­cal petro­chem­i­cal com­pa­ny, or bank B is about to make a for­eign ac­qui­si­tion, would they be sell­ing US dol­lars to any of their cus­tomers who asks for it–even those cus­tomers who have for­eign cur­ren­cy ac­counts with them?

Maybe the Bankers' As­so­ci­a­tion needs to tell the thou­sands of peo­ple im­pact­ed.