The head of the Central Bank of Barbados has dismissed suggestions it might be flooding the market with new bank notes to help Government out of a deep financial hole.
Just yesterday in his economic review for the first six months of the year Governor Dr. DeLisle Worrell reported that his organisation provided $70 million to help finance government’s $198 million deficit.
But the veteran economist, responding to questions from the media today, said there was nothing untoward involving the new bank notes which went into circulation last month. Worrell said there was “no ground” for any suggestion of hanky-panky.
“The process continues as before, that new notes are issued only as an equivalent note is retired. So the commercial banks send dirty notes to us, they say ‘these notes are no longer sufficiently presentable’, in fact we make adjustment as well because we want our currency to look clean and people have confidence in handling it,” he explained.
“So if the previous notes which come in to us are clean and good we issue them back, but any of those that are not fit for circulation we take them out and we give them an equivalent of a new note. So there is no additional currency going into the market. Money supply remains exactly as it was before.”
“And the new notes and old notes continue to be in circulation in parallel and it is not that we sort of have added a new set of notes, the total remains the same it is just the mix that has changed.”
Worrell also said he said he personally had no concern that people might be hoarding United States currency.
“You are in the market, you know better than I, but I would say that anybody who is hoarding is wasting their time quite frankly because nothing is going to happen to the currency so you might as well be investing it in something that is going to earn you a return,” he stated.
The economist said fears like these were unnecessary since “Barbadians have every reason to be confident that we can cure the foreign exchange imbalance which has emerged in the last three months and revive the growth of our economy”.
He also said the island was not running out of time to improve its economic fortunes before things worsened.
“No we are not (running out of time) and that is why we place much emphasis on the reserves. We would be running out of time if we were losing reserves but throughout all the difficulties that we have had we have kept our reserves, that has given us the leeway, the scope, it means that we can do things in the way that can makes sense in our economic circumstances,” he said.
Worrell also had no fear that there would be a further downgrade from the international credit rating community.
“No, because we are taking prompt action. What Moody’s is concerned about are the two things that we have established as priority. Is the government taking adequate action to protect the stability of the economy in the short run? And are we doing the things that are necessary to increase our competitiveness so that we can grow this economy in the medium term?,” he noted.
“…We are addressing both of those, and we are addressing both of them in the appropriate fashion.” (SC)