Bank of America, Jamaica's saving grace

Friday, August 09, 2019

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Jamaica's foreign exchange trading system is being held together by Bank of America, which is the only overseas bank willing to accept its excess cash US dollars.

This admission came from two principals in the banking system, speaking at The Jamaica Observer Monday Exchange.

Bank of Jamaica (BOJ) Deputy Governor Natalie Haynes and assistant general manager at National Commercial Bank, Peter Higgins both indicated that Bank of America has been Jamaica's saving grace in the provision of correspondent banking relationship.

“If Bank of America withdraws from taking cash American dollars from Jamaica, the country would suffer,” Deputy Governor Haynes acknowledged, pointing out that local banks would have nowhere else to store their excess hard currency.

She made the point that should such an event arise, the system would shut down since entities would be forced to sell American dollars bought to prevent having too much excess hard currency.

Higgins commented, “Right now if they (Bank of America) should back out, we would be in serious problems.”

He pointed to HSBC Bank, which used to accept Jamaica's excess cash but pulled out some years ago giving a two weeks' notice to the local banking sector, citing de-risking concerns.

Deputy Governor Haynes explained that in any legitimate business one would have excess cash and would need banking services to hold such excess, pointing out that the BOJ itself has excess American dollars and utilises Bank of America to repatriate such excess cash.

She was quick to explain that BOJ doesn't expatriate a wad of cash but small amounts averaging about US$ 1 million per year.

She pointed to the recently signed FX Global Code of Conduct among foreign exchange traders, which would bring more credibility to Jamaica's banking system, thus giving cause to ease the de-risking concerns by overseas correspondent banks.

The bankers emphasised that the code, which has been adopted by 65 countries, was signed by all licensed cambio dealers in Jamaica, which is the only Caribbean country that is a signatory to this global code.

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