My fingers are burning me. However, I do understand what “before the courts” means, even in its Latin form of “sub judice”. So, for now, we will have to pass over whether the Governor of the Central Bank should have got an injunction, as well as any comment on what this matter could possibly be about, until such time as the Court of Appeal has delivered its decision. The arguments were made today before the court. In the meantime, though, words, phrases and acronyms like I.M.F. and devaluation are being bandied about with increasing frequency and one former Prime Minister and Minister of Finance has estimated 90 days before our own version of the apocalypse.
Section 5 of the Central Bank of Barbados Act, Chapter 323C outlines the purpose of the Bank, including the need “to regulate the issue, supply, availability and international exchange of money.”
In fleshing out the Bank’s role in this respect, Section 26 of the Act goes on to state that: “(1) The Bank shall maintain a Reserve of External Assets consisting of all or any of the following on such terms and conditions as the Board prescribes (a) gold; (b) foreign exchange in the form of currency, cash or bank balances held abroad; (c) any internationally recognized reserve asset . . . and (2) The Bank shall use its best endeavours to maintain the Reserve of External Assets at a level adequate for the international transactions of Barbados.” That level is generally accepted as the equivalent of 12 weeks’ worth of imports.
During the 20th Adlith Brown Memorial Lecture in 2005, entitled Foreign Exchange Reserves: How Much is Enough?, then Governor of the Central Bank Dr Marion Williams stated that “[r]eserves help to maintain confidence in the currency, and allow central banks to intervene in the market in order to influence the exchange rate. They also permit central banks to limit the vulnerability of the country to external shocks, give confidence to the public and reassure credit rating agencies and international financial institutions about the soundness of the economy.” Basically, it helps to avoid IMF structural adjustment.
As guardian of the Reserve, the Bank’s role is pivotal in the event of a crisis and it is important that the independence of the Bank is maintained. Section 26 of the Act goes on to provide that “(3) If the Reserve of External Assets has declined, or in the judgment of the Board appears to be in danger of declining, so as to jeopardize the adequacy of such Reserve, the Bank shall submit to the Minister a report on the reserve position and the causes which have led or may lead to such a decline, together with its recommendations concerning the measures it considers necessary to forestall or otherwise remedy the situation. (4) The Bank shall make further reports and recommendations at intervals not exceeding 6 months, until such time as, in the judgment of the Board, the situation is rectified.”
As to the governance structure of the Bank, Section 10 provides that: “[t]here shall be a Board of Directors of the Bank, which shall be responsible for the policy and general administration of the Bank. (2) The Board shall consist of a Governor, the Director of Finance and Planning and five other Directors. (3) There shall be two Deputy Governors of the Bank…(4) The Board may make by-laws regulating the conduct of the Bank’s business and may make regulations and issue orders for the purpose of giving effect to the provisions of this Act.”
Everywhere else in the real world people resign all the time. Got caught in a scandal? Resign. Failed at your job? Resign. Can’t work with your boss? Resign. What I would like to know is, why the Central Bank Board (on whom the statutory responsibility rests) felt that the approach should be to call for someone else’s head on a platter instead of doing what other persons in developed countries would do – resign? Were they asleep for the last few years? An entire board tenders resignations en masse, the situation becomes untenable, someone gets proper legal advice, and we avoid questionable (albeit expensive) litigation.