GEISHA KOW­LESSAR ALON­ZO

In the face of per­sis­tent for­eign ex­change im­bal­ances and mount­ing stake­hold­er con­cerns, the Cen­tral Bank of T&T (CBTT) is plac­ing forex al­lo­ca­tion re­form at the fore­front of its strate­gic agen­da.

As it en­ters the fi­nal year of its 2021 to 2026 strate­gic plan, the bank is shift­ing from broad-based pol­i­cy mod­erni­sa­tion to more sur­gi­cal in­ter­ven­tions — chief among them, a tran­si­tion to­ward a needs-based forex dis­tri­b­u­tion mod­el.

This ap­proach aims to pri­ori­tise crit­i­cal sec­tors such as health­care and ed­u­ca­tion over dis­cre­tionary con­sump­tion, sig­nalling a de­ci­sive move to align cur­ren­cy man­age­ment with na­tion­al de­vel­op­ment im­per­a­tives.

The re­cal­i­bra­tion is not mere­ly tech­ni­cal; it re­flects a broad­er in­sti­tu­tion­al piv­ot to­ward trans­paren­cy, ef­fi­cien­cy and eco­nom­ic re­silience in an in­creas­ing­ly volatile glob­al en­vi­ron­ment.

At the heart of this strate­gic re­cal­i­bra­tion is a dual com­mit­ment to tech­no­log­i­cal in­no­va­tion and eco­nom­ic stew­ard­ship.

The bank’s su­per­vi­so­ry and pol­i­cy frame­works are be­ing reengi­neered to ac­com­mo­date emerg­ing fi­nan­cial tech­nolo­gies, shift­ing con­sump­tion pat­terns and the in­creas­ing­ly com­plex dy­nam­ics of for­eign ex­change man­age­ment.

This is not a re­ac­tive pos­ture but a proac­tive em­brace of struc­tur­al change — one that po­si­tions the CBTT as both reg­u­la­tor and en­abler in a rapid­ly digi­tis­ing fi­nan­cial ecosys­tem.

One of the most con­se­quen­tial strate­gies un­der con­sid­er­a­tion is the use of se­lec­tive cred­it con­trols via moral sua­sion.

Rather than im­pos­ing rigid reg­u­la­to­ry ceil­ings, the bank aims to in­flu­ence lend­ing be­hav­iour through per­sua­sive en­gage­ment with fi­nan­cial in­sti­tu­tions.

Com­ple­ment­ing this is a re­newed fo­cus on liq­uid­i­ty man­age­ment.

The bank is ex­plor­ing mech­a­nisms to re­cal­i­brate con­sump­tion pat­terns and tight­en liq­uid­i­ty con­di­tions in a way that sup­ports macro­eco­nom­ic sta­bil­i­ty.

This strat­e­gy is par­tic­u­lar­ly rel­e­vant in an en­vi­ron­ment where in­fla­tion­ary pres­sures and ex­ter­nal shocks could un­der­mine mon­e­tary pol­i­cy ef­fec­tive­ness.

By fine-tun­ing liq­uid­i­ty flows, the CBTT hopes to cre­ate a more re­spon­sive and re­silient mon­e­tary trans­mis­sion mech­a­nism.

Trans­paren­cy in for­eign ex­change al­lo­ca­tion is an­oth­er cor­ner­stone of the bank’s evolv­ing strat­e­gy.

While con­fi­den­tial­i­ty re­mains para­mount, the CBTT recog­nis­es that opaque forex dis­tri­b­u­tion could erode pub­lic trust and dis­tort mar­ket sig­nals.

The pro­posed re­forms aim to strike a bal­ance — en­hanc­ing vis­i­bil­i­ty with­out com­pro­mis­ing sen­si­tive com­mer­cial da­ta.

This is es­pe­cial­ly crit­i­cal as the bank moves to­ward a needs-based forex dis­tri­b­u­tion mod­el, pri­ori­tis­ing es­sen­tial sec­tors such as health­care and ed­u­ca­tion over dis­cre­tionary im­ports.

The Sun­day Busi­ness Guardian reached out to the Cen­tral Bank seek­ing fur­ther in­for­ma­tion on:

(i) Se­lec­tive cred­it con­trols via moral sua­sion to curb ex­ces­sive con­sumer lend­ing;

(ii) Tighter liq­uid­i­ty man­age­ment and ad­just­ments to con­sump­tion pat­terns;

(iii) Im­proved trans­paren­cy in forex al­lo­ca­tion while main­tain­ing con­fi­den­tial­i­ty;

(iv) A move to­wards a needs-based for­eign ex­change dis­tri­b­u­tion mod­el, pri­ori­tis­ing crit­i­cal sec­tors (e.g., health­care, ed­u­ca­tion) over dis­cre­tionary spend­ing;

It was al­so asked how would the bank bring all these plans to fruition.

In re­sponse the bank said, “These are pol­i­cy op­tions which we are cur­rent­ly ex­plor­ing be­fore de­ter­min­ing our pre­lim­i­nary ob­jec­tives for the up­com­ing pe­ri­od. There­fore at this time, the de­tails have not been ful­ly worked out and we shall seek to do so in the up­com­ing plan­ning cy­cle.

“The se­lec­tive cred­it con­trols re­late to quan­ti­ta­tive re­stric­tions on lend­ing for cer­tain types of con­sumer items e.g. im­por­ta­tion of se­lect­ed agri­cul­tur­al prod­ucts that com­pete with lo­cal farm­ers such as Flori­da wa­ter­mel­ons.

With tighter liq­uid­i­ty man­age­ment, we shall be seek­ing to en­sure that liq­uid­i­ty con­di­tions are not so loose that they spark in­fla­tion but not so tight, that they choke off cred­it for in­vest­ment pur­pos­es.”

In the area of for­eign ex­change the bank ex­plained it is ex­am­in­ing re­port­ing guide­lines that could be used to give the pub­lic a clear­er un­der­stand­ing of the dis­tri­b­u­tion process.

“As in­di­cat­ed, these are mat­ters which we shall be ex­plor­ing in the up­com­ing year with a view to de­ter­min­ing how they can be im­ple­ment­ed,” it added.

On Sep­tem­ber 4, 2025 Gov­er­nor Lar­ry Howai held an open dis­cus­sion and did a pre­sen­ta­tion on, ‘T&T’s eco­nom­ic per­for­mance and the for­eign ex­change mar­ket.’

This event was the cul­mi­na­tion of the past month’s ac­tiv­i­ties, in­volv­ing nu­mer­ous en­gage­ments with stake­hold­ers.

One of the key mea­sures out­lined is the need for an in­crea­sein in­ter­est rates to ad­dress the per­sis­tent forex short­age.

An­oth­er trans­for­ma­tive ini­tia­tive, the bank iden­ti­fied in its plan is the push for leg­isla­tive frame­works to sup­port dig­i­tal pay­ment ap­pli­ca­tions such as Zelle, CashApp, and Ap­ple Pay in­to the lo­cal fi­nan­cial ecosys­tem, com­ple­ment­ing ex­ist­ing plat­forms like Wi­Pay.

This move is ex­pect­ed to ex­pand fi­nan­cial in­clu­sion and mod­ernise the coun­try’s pay­ment in­fra­struc­ture.

Re­gion­al push for re­al-time cross-bor­der pay­ments

The Cen­tral Bank is prepar­ing to par­tic­i­pate in a pi­lot pro­gramme for the CARI­COM Pay­ment and Set­tle­ment Sys­tem (CAPSS), a dig­i­tal in­fra­struc­ture de­signed to fa­cil­i­tate re­al-time cross-bor­der pay­ments us­ing lo­cal cur­ren­cies.

The ini­tia­tive marks a sig­nif­i­cant step in the re­gion’s ef­forts to re­duce re­liance on in­ter­me­di­ary cur­ren­cies and stream­line in­tra-CARI­COM trade and fi­nan­cial flows.

The CAPSS pi­lot fol­lows a suc­cess­ful proof-of-con­cept con­duct­ed in Feb­ru­ary 2025 be­tween the cen­tral banks of The Ba­hamas and Bar­ba­dos.

That tri­al demon­strat­ed the fea­si­bil­i­ty of in­stant, se­cure trans­ac­tions across bor­ders us­ing do­mes­tic cur­ren­cies — a break­through that has prompt­ed CARI­COM cen­tral bank gov­er­nors to en­dorse a broad­er val­i­da­tion phase.

The next stage will in­volve four coun­tries: The Ba­hamas, Bar­ba­dos, Guyana and T&T, rep­re­sent­ing a mix of small and large is­land economies.

CBTT to Launch Su­per­vi­so­ry Tech Pi­lot

The bank is set to be­gin pi­lot test­ing of a new Su­per­vi­so­ry Tech­nol­o­gy (SupTech) plat­form in the 2025/26 fi­nan­cial year, mark­ing a ma­jor mile­stone in its mul­ti-year ef­fort to mod­ernise reg­u­la­to­ry over­sight across the fi­nan­cial sec­tor.

The ini­tia­tive is part of the bank’s broad­er strate­gic plan to en­hance the ef­fi­cien­cy, ac­cu­ra­cy, and re­spon­sive­ness of its su­per­vi­so­ry frame­work through dig­i­tal in­no­va­tion.

The roll­out is de­signed to trans­form how the CBTT mon­i­tors reg­u­la­to­ry com­pli­ance, de­tects emerg­ing risks and re­sponds to fi­nan­cial vul­ner­a­bil­i­ties.

By lever­ag­ing ad­vanced an­a­lyt­ics and au­toma­tion, the plat­form would en­able re­al-time da­ta pro­cess­ing, ear­ly warn­ing ca­pa­bil­i­ties and more dy­nam­ic re­port­ing — a sig­nif­i­cant up­grade from tra­di­tion­al su­per­vi­so­ry meth­ods that re­ly heav­i­ly on man­u­al da­ta col­lec­tion and ret­ro­spec­tive analy­sis.

Ac­cord­ing to the bank’s strate­gic im­ple­men­ta­tion roadmap, the pi­lot phase would be con­duct­ed in col­lab­o­ra­tion with a se­lect­ed tech­nol­o­gy ven­dor and will serve as a crit­i­cal test­bed for eval­u­at­ing sys­tem per­for­mance, scal­a­bil­i­ty, and in­te­gra­tion with ex­ist­ing reg­u­la­to­ry process­es.

The pi­lot is ex­pect­ed to lay the ground­work for full de­ploy­ment across reg­u­lat­ed en­ti­ties in sub­se­quent years.