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IMPOTENCE OR DERELICTION?

IMPOTENCE OR DERELICTION?
August 24
10:47 2019

Friday, August 23rd. 2019 –

In October 2016 the Central Bank of Belize introduced its new modern national payment system, the Automated Payments & Securities Settlement System (APSSS). The Central Bank boasted that the APSSS would enhance “the safety, reliability and efficiency of the financial system’s payment infrastructure.”

Effective July 1, 2019 the Central Bank began to charge the commercial banks “minimal” transaction fees related to the use of the APSSS. According to the Central Bank, the fees were “strategically designed to encourage the usage of the more efficient payment instruments.”

Even after the Central Bank bore the cost of the new system all by itself for three years, the commercial banks could not resist the opportunity to put their hands deep in the pockets of their customers by marking up the “minimal” fees being charged by the Central Bank. Since it was a new fee structure that coincided with the new APSSS many people thought it was the Central Bank that was sticking it to them.

On July 16, 2019 Filippo Alario, the Deputy C.E.O. of the Belize Bank told the media that the marked up fees were to meet the increasing cost of banking. He alluded to the rigorous anti-money laundering regime to which the banks are now subject. To add insult to injury, he went on to advise that “the Central Bank cannot force a bank to charge more or less.”

As alarming as Alario’s statement was, what is even more alarming is that Joy Grant’s Central Bank has not uttered a word to dispel Alario’s clearly mis-stated view regarding the powers of the Central Bank.

The Central Bank is responsible for regulating all banks and financial institutions licensed under the Domestic Banks and Financial Institutions Act. In fact, Section 7(1) (p) of the said Act empowers the Central Bank to regulate the “fees and commissions charged to customers by banks.” The Act also prescribes stiff penalties for the breach of any of the Central Bank’s regulations. Fines of up to one hundred thousand dollars or to imprisonment for a term not exceeding three years are possible upon summary conviction.

The question that must be asked now is that if the Central Bank is so empowered, yet it sits idly by and does nothing to protect the Belizean people, isn’t it in dereliction of its duty? In as much as the Central Bank has a duty to nurture the commercial banks it has an equal duty to the Belizean people to ensure that they are not taken advantage of. Inflating the minimal fees charged for the use of the APSSS is an abuse by the commercial banks and the Central Bank has a duty to address it forthwith!

In 2016 when the bus operators gave themselves a 20% increase in fares between Belize City and Belmopan, the Government was quick to bring them in line and point to the fact that they cannot raise fares without authorization. In 2019 when the banks marked up the APSSS fees by as much as 250% we have heard not a peep from the Government.

In 2008, driven by political malice the Central Bank gave the Belize Bank 10 days to return the US$10 million from Venezuela. You will recall that Said Musa had diverted the Venezuela grant to settle a deed of debt in relation to the sovereign guarantee given to UHS. The Central Bank’s 2008 decision has caused the US$10 million to balloon to US$45 million.

The Central Bank was bold in 2008 so what happened in 2019? How is it that officials from the Belize Bank are saying that the Central Bank can’t tell them what to do with respect to the huge mark-up they have placed on the APSSS related fees?

It seems to me that when it is time for the government agencies to protect us, the ordinary people, they fall into paralysis. We saw this same kind of behaviour from the Barrow administration when it was exposed that butane dealers were gouging the Belizean people. Despite regulations requiring butane to be sold by weight, the retailers send their trucks around without scales. Incredibly the Government has passed the duty of enforcement to us. We should insist that they weigh our tanks they say, but what is so hard for the government agencies to check the retailers to ensure compliance?

One of the banking officials said on the news that they were reasonable in the fixing of their fees because of competition. Absolute bullocks! In a real market economy competition would regulate the fees being charged by the banks but there are two things that one must factor into the banking market in Belize. First, banking in Belize is an oligopoly: there are only four banks in Belize and by the looks of it they may be in cahoots when it comes to rate setting! Second, because of the banks’ own internal weaknesses which have led to money laundering and other nefarious deeds, the process of opening an account has become so painful, that despite the abuse of customers by the banks the average customer remains put.

Perhaps one of the underlying reasons for the Central Bank’s impotence is the lack of arm’s distance between the Central Bank and the commercial banks they are supposed to regulate. If you look at the number of Central Bank staff who have left to join the commercial banks you will understand why they treat the commercial banks with kid gloves. We should by law restrict the movement of Central Bank staff to the commercial banks for a period of 5 years. Maybe then we would get them to do their damned jobs!

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