From education we go to the banking sector - where we continue our interview with Scotiabank's Managing Director, Michael Shaw. It's not often we get to talk to a bank manager - and so we asked him about the money supply, and why banks are offering such low rates on savings. Its been working out well for a credit hungry government, which has been capitalizing on the excess liquidity by offering government paper, at attractive rates. Its last offering of one hundred and forty million dollars was over subscribed by 35 million dollars. We asked Shaw if the market's thirst for a good rate suggests that the banks are doing something wrong:...
Michael Shaw, Managing Director - Scotiabank Belize
"There is lots of liquidity. So the truth is there are more money in Belize and that is the truth. There is also the lack of capital market, there are no stock and bonds and all those wonderful things to invest the money in and as such the government has chosen to take the lead to issue these treasury notes or other instruments. It is within the wisdom of the Ministry of Finance to do so."
Jules Vasquez
"But is it indicative of something that broken in the banking system in so far as, because people don't have anywhere to put their money. You all don't want the money."
Michael Shaw, Managing Director - Scotiabank Belize
"It's not that we don't want the money. We have an obligation as a bank to take the deposits. Based on the liquidity situation we too would want something to do with the money. The challenge of course lies in the inherent foreign exchange regulations, because you can't invest those monies offshore and it takes me right back to my initial argument about the lack of a capital market in Belize. So that money keeps going in a circle. That's exactly what happens. So if the government in its wisdom would have taken the opportunity to issues these papers which they have the right to do."
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