HOW DO YOU pay your daughter’s tuition at the University of Central Florida or for your son’s surgery at New York University Medical Centre in Manhattan?
After all, your money is in a bank in Speightstown that doesn’t have a branch in the United States so you can’t simply write a personal cheque and send it off to a child.
Answer: Your bank uses its correspondent banking partner in America to pay the bill in US currency.
The system has become so routine that up until now few Bajans gave it a second thought. But with global banks cutting their corresponding banking relationships, with some of the region’s banks, there is a rising concern about the possibility of Barbados, Trinidad and Tobago and their neighbours being cut off from the worldwide financial system. Should that happen, economic chaos could occur.
That explains why the Caribbean is so concerned and why the State University of New York-University of the West Indies Centre for Leadership and Sustainable Development organised a symposium in New York to examine the issue and invited Owen Arthur, a former Barbados’ Prime Minister and Minister of Finance to talk about it.
Addressing an audience of Caribbean economists, bankers, academicians, several ambassadors at the United Nations, including Barbados’ Tony Marshall, an official of the International Monetary Fund, a former president of the Caribbean Development Bank, Dr Compton Bourne, and members of the Caribbean diaspora, Arthur said the banking crisis would “now add a new powerful adverse dimension” to the challenges the region was facing. The combination would “make the transition to a sustainable development macro-economic path” more difficult, if not virtually impossible.
What was clear, he went on, was that “any development that de-links the Caribbean from external financial markets or makes it difficult for economic agents to carry out the myriad of trade and financial transactions which takes place across boundaries” would be a burden the countries couldn’t afford.
The former leader was quick to insist that the “wholesale cutting loose of clients and various types of businesses without evaluating the risks they pose was not intended to be a substantive part of the fight against global financial crime and terrorism.” But that was precisely what the de-risking exercise amounted to and “where the global financial community was increasingly headed.”
As he sees it, the crisis underscored the “Caribbean’s need more than ever to master its cross border economic and financial relationships. It has suffered grievously in the past from the failure to do so.”
He wants the Caribbean to have a seat at the international table where global rules were formulated.
As Bourne explained, more than ten Caribbean banks in five countries, including two central banks had lost their corresponding banking relations and he urged the area’s monetary authorities to establish regulatory and supervisory regimes for international monetary transfer business.
Dr Richard Bernal, a former Jamaica Ambassador to the US who is now UWI Pro-vice Chancellor of Global Affairs, Dr Trevor Alleyne, of the IMF’s Caribbean Department, and Dr Damien King, a senior economics lecturer at the UWI’s Mona campus were among the panellists at the symposium.
Liz Thompson, executive director of the SUNY-UWI Centre and the driving force behind the symposium, described it as an outstanding success, because it had triggered an important discussion “on an issue that was affecting the entire region” and that had worldwide implications.
“It’s of immense importance to Caribbean economies and to the international community,” said Thompson, a former Cabinet minister in Barbados who later became an Assistant Secretary-General of the UN.
“The analysis and recommendations underscored the challenges the Caribbean faces.”
The centre, the brain-child of H Carl McCall, chairman of the SUNY Board of Trustees, and Professor Hilary Beckles, UWI Vice Chancellor, was launched last year. Its goal: “To reach, educate and empower underserved diaspora populations and become a platform for their upward social mobility.”
Tony Best is the Nation’s North American correspondent. Email: Bestra@aol.com
