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EDITORIAL: Let’s not make this any worse, Mr Sinckler


EDITORIAL: Let’s not make this any worse, Mr Sinckler

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REFORM OF THE GOVERNANCE MODEL of the Central Bank of Barbados was inevitable following the recent public dispute between former Governor Dr DeLisle Worrell and Minister of Finance Chris Sinckler. It was a most unfortunate affair which left the bank bruised and its image tarnished. No one came out a winner.

The Central Bank of Barbados is no different from its counterparts worldwide, which are struggling to stay above the politics. This is why Mr Sinckler must be careful that any new legislation he proposes does not make the situation worse.

The problem with the Central Bank is that it was set up at a time when there was a clear separation between the fiscal policymakers and the technocrats who deal with monetary issues. Forty-five years ago the consolidation of power in the governor, as chairman of the board and its chief executive officer (CEO), was not seen as portending any conflict of interest.

We don’t know how well it worked over the years and will have to depend on the records being opened for analysis to be informed of any blunders along the way.

This American model of unifying the role of chairman and CEO is fraught with problems, which is why any new legislation recommending a separation should be welcomed.

There are other serious considerations in any proposed changes to the regulations. We support an independent Central Bank, which must also be shielded from unwarranted political pressures. But the bank must not put taxpayers last in line, behind commercial bankers, interest rates and general secrecy. This, however, does not mean monetary policy should be subjected to review and approval by the political directorate or legislature.

In the Government’s efforts to initiate change, it should remember that the discussion must not be viewed as one for a select group, and it must make sure to embrace the public along the way. Neither should legislation simply be copied from other jurisdictions; it may be irrelevant.

In a developing nation such as ours, we should expect conflict between the Central Bank and the political directorate. Indeed, it is widely understood that this has been the case since the first local governor, Sir Courtney Blackman, held office.

This is why Mr Sinckler and those reviewing the legislation should consider four key things in any planned upgrades: how the governor is appointed; limits on Government to borrow from the bank; what the primary goals of monetary policy are; and Government’s intervention in shaping policy decisions.

The public is worried about the country’s debt problems and does not want a situation where politicians can pressure the Central Bank to finance the debt by printing money or punish its leadership if they fail to cooperate. The controversy surrounding Dr Worrell became a public spectacle. But at least it forced Government’s hand to review the relevant legislation. Every Barbadians wants the Central Bank to be not only independent but credible.