?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.