Recently, there's been a lot of news about the difficulties that 2 banks in Belize have been having after their correspondent banking relationship was severed by the Bank of America. The Prime Minister has commented that it's a situation that is lamentable, but inevitable. Not surprisingly, Opposition Leader Francis Fonseca disagrees. While he had the media's attention today, he took the opportunity to discuss why this issue needs urgent attention:
Hon. Francis Fonseca, Leader of the PUP
"We have heard about offshore banks and correspondent banks. These are terms that have become very familiar to the Belizean people, but the reality is that offshore banks with no corresponding banks, means no offshore banking sector and the essence of offshore banking is the free flow of foreign currency, primarily US dollars through the banks without any exchange control. This is a kin to conducting banking business in the US, but doing it outside of the US. Without these corresponding banks that we have been hearing about then you are forced to do banking essentially back in the United States, which means that Belize offshore banks are no longer attractive and ultimately leads to a loss skilled labor jobs."
"Just to purchase of consumer items from abroad like imported food, or imported electricity, or imported fuel, not to mention capitol items like steel, cement and equipment will become difficult. Nowhere as you all know very well, other than in Belize is the Belize dollar accepted. We can't pay for imported goods and services with Belize dollars. We need hard currency to buy these things with. We need US dollars and even if we have US dollars in this day and age especially, we can't pay any supplier with cash. Even if we could safely transport this cash, they wouldn't accept it, because of all of the rules on money laundering. Nobody accepts cash nowadays. There is almost a presumption of illegality if you try to pay with cash."
He also explained that exporters could have difficulties getting paid from their international customers in the developed countries that are de-risking. So, what's the fix? Well, according to Fonseca, the Government and the Central Bank of Belize need to start an aggressive campaign in the countries that are de-risking to convince them that there is no financial risk to keep their relationships with banks in Belize:
Hon. Francis Fonseca, Leader of the PUP
"Convince the United States and other developed jurisdictions, other developed nations who are blacklisting us that Belize is not risky. If they agree we are not risky, then there is no de-risking to be done. It is as simple as that and that is where our government has been falling down and failing. So we can't stand idly by and do nothing as we seem to have been doing so far, relative to what other jurisdictions have been doing - vey aggressively tackling this issue. The central bank has been leading the efforts in their jurisdictions to address this matter, to meet on a consistent and continuous basis with other countries to try and resolve this matter."
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