October 22, 2020

The Editor Speaks: Bank on Sir Ron to spell it out

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colin-wilsonweb2Yesterday (Tue Nov 1) we published a commentary by a man I have the highest of respect for, Sir Ronald Sanders. It is titled “Banking: Is the making a stick to beat its own back?”

He comments with a severe warning on the insane withdrawal of correspondent banking relations from regional banks by international banks, particularly those located in the US.

The Caribbean is the hardest of all regions to be hit by this and Sir Ron quotes of the International Monetary Fund (IMF), Christine Lagarde, “correspondent banking is like the blood that delivers nutrients to different parts of the body. It is core to the business of over 3,700 banking groups in 200 countries”.

And the country at the root of this problem and evil is, of course, the United States of America and to a lesser extent the European Union Commission, by branding Caribbean countries as tax havens. Sir Ron says, “even though the evidence does not support the contention”.

He goes on, “This is not an abstract issue, restricted to the banking sector or governments. The adverse effects will spare no one. They will affect every sector of economic and financial activity including tourism, importers and exporters of goods, and individuals who either send money abroad or receive it.

“On the tourism sector, airlines will not be able to transfer monies earned in the Caribbean to their home locations; cruise ships will not be able to pay for their passengers who sail to the region; hotels will not be able to purchase the food and beverages they import for the tourism industry; motor car dealers won’t be able to pay for vehicles they bring in to the country. Even persons abroad, who send money to their dependent relatives, will find it impossible to do so. And, so the list goes on.”

Even though we here in the Caribbean are feeling the squeeze it is not just here.

“A recent study,” says Sir Ron “of the impact of de-risking on correspondent banking globally found that 75 percent of large international banks have reduced their total number of correspondent banking relationships, and 80 percent reported that they had severed all relationships in some jurisdictions. The study also revealed that about 55 percent of banks receiving correspondent banking services reported a decline in the availability of those services, with about 70 percent of those reporting a decline indicating that the decline was “significant”.

“According to the IMF, at least sixteen banks in five Caribbean countries had lost all or some of their correspondent banking relationships as of May 2016. The same study reports that, in Belize, only two out of nine banks (representing 27 percent of banking system assets) have been successful in maintaining correspondent banking relations with full banking services.

“And in the Bahamas, five financial institutions (accounting for 19 percent of banking system assets) have lost at least one correspondent banking relationship. But, no Caribbean country has been spared and banks in all of them, including in the , Barbados, Jamaica and Guyana, are currently facing the real prospect of losing all correspondent relations with US banks.”

Sir Ron concludes with this stark warning to the Untied States:

“The dreadful effects of such a woeful transformation of the Caribbean would not be limited to the Caribbean Sea. Inevitably, economic refugees will end up on the shores of US territory and other wealthy countries; so too would drugs, trafficked through the region, that would increase as the unemployed and the desperate seek means to survive. Additionally, money would find unregulated and unstructured ways to cross borders, defying the very money laundering activities that withdrawing correspondent banking relations are trying to suppress.

“Further, if Caribbean countries cannot pay or be paid for the goods and services they trade with the US, they will be forced to turn their attention elsewhere. In such a case, the US will lose revenues and jobs. The total loss may be minuscule, given the relative small size of Caribbean markets; nonetheless they will have an impact.

“Of greater importance is the loss of US influence in a region that sits next door. That vacuum will be filled by some other country or group of countries that the US might not appreciate. But, the people of the Caribbean have to survive. It will not be that they love the US any less, but they love life more.

“By failing to respond swiftly, creatively and positively to the destructive effects of the withdrawal of correspondent banking relations, US decision-makers in government, in regulatory bodies, and in the legislature might be making a stick to beat their own backs.”

To read the whole article go to: https://www.ieyenews.com/wordpress/sanders-banking-is-the-us-making-a-stick-to-beat-its-own-back/

Will the US listen? I very much doubt it. When you have two unpopular candidates
running to be the next president with one who has been in the top echelons of power for thirty years and is the most likely to win, I fear the writing is very much on the wall. Change of power and direction is most needed and the American public see this. Unfortunately the people wielding this power don’t. They take no notice of the people, have total disdain for them and their main interest is how to get rich as quickly as possible and most have that maniacal disease – POWER.

Sir Ron’s common sense, his distinguished record and love for his native Caribbean was not enough to get him elected as the rightful Commonwealth Secretary-General. That is also a tragedy.

Perhaps Sir Ronald Sanders spells it out with truth that his social peers don’t like. I would bank on that.

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