00:00With Scotiabank announcing reduced forex limits for both its debit and credit card
00:05mere weeks before the busiest shopping period of the year, tensions are
00:10heightening across the country. Indeed we have to also consider the possibility
00:14that other banks may also be considering to take similar steps. Many people are of
00:19the view that commercial banks are hoarding the foreign reserves. Economist
00:23Valmiki Arjun notes that the trend in past years points to a surplus in
00:28foreign reserves. At the end of 2022, 2021 and 2020, they actually had a surplus
00:35of 248 million, 392 million and 86 million respectively in those three
00:41years, leaving a total surplus in that three-year period of 726 million US
00:48dollars. In fact in the last 10 years, banks held a surplus of about 1.25
00:53billion. Yet still consumers struggle to access the forex needed to conduct their
00:58business, begging the question where the forex gone? Arjun believes it's high
01:05time the government step in to protect the interests of the public. It's highly
01:09possible that they're building up foreign exchange to use for their
01:13proprietary portfolios and investing in foreign financial assets like for
01:18example US Treasuries, which is resulting in them having an excess of US assets
01:22over US liabilities. Now this practice of course naturally ties up US dollar funds.
01:28Which instead could have been allotted to the general public and business
01:32sectors. Now this raises an important policy and regulatory question. Should
01:37regulation be implemented to limit the extent to which banks can hold foreign
01:42currency assets in excess of the foreign currency deposit liabilities? Now this
01:46could be a temporary measure, at least until our forex earnings from exports
01:52return to a high level. Arjun warns that if the situation is not addressed
01:56expeditiously, the economy will suffer. The finance minister appeared to respond
02:01to the economist's call for legislative intervention saying via Twitter quote
02:06the request by the media and some businessmen that the Minister of Finance
02:11regulate access to forex distributed by the private commercial banking sector is
02:15interesting. This could be construed by other stakeholders as political
02:20interference. So I will look at this very carefully end quote. TV6 News
02:25attempted to get a response from the Bankers Association and also called the
02:30finance minister's phone. However both attempts proved futile.
02:34Renessa Cutting, TV6 News
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