"How long will it take?"

Belize is a tiny country. They don't have the reserves or international power to put off the inevitable shake-out for long. On the other hand, if someone (like the IMF) gives them a loan or two or three there is no telling how long the status quo can be maintained.

Twelve apply for cambio license

The last few weeks have been quiet on the foreign exchange scene, and during that time prospective operators of newly enfranchised casas de cambio have been getting their applications in order. According to a release from the Central Bank, regulations establishing the exchange houses will take effect on Monday April, fifteenth. Twelve prospective currency traders have applied for licenses, three each in San Pedro and Belize City, two in Orange Walk and one each in Corozal, Dangriga, Benque Viejo and Punta Gorda. Applicants pay a non-refundable up front fee of five hundred U.S. dollars and, if successfully licensed, an annual fee of five thousand U.S. dollars. At the same time the exchange houses are licensed, the Central Bank says it will crack down on illegal traders, who are liable for a fine of up to ten thousand dollars or jail time as long as a year. The idea behind the casas de cambio is to bring the illegal market in foreign exchange under some kind of regulation and in so doing make it less subject to psychological influences.

Casas de cambio will open Monday

Aside from higher bus fares, Monday will also witness the
opening of some new financial institutions in Belize. The first of the freshly licensed casas de cambio will begin buying and selling foreign exchange, primarily U.S. dollars, and no one is quite sure what to expect. Although the exchange rate will technically remain at two to one the casas will be allowed to charge a service fee, which, along with government taxes, will peg the selling rate of a greenback at a maximum of two fifteen Belize. James Janmohamed of San Pedro, is president of the newly formed Belize Association of Casa de Cambios. We asked him why the cambio system is better than the old fashioned illegal market.

James Janmohamed, President, Assoc. of Casas de Cambio
"The first reason is that when you formalise it, you stop anybody using it for ulterior motives such as money laundering and all of that. Because now everybody will be recorded, their names are recorded properly and handed back to Central Bank. Every month we will have a reporting procedure through the Central Bank, and everyday transactions are to be kept and can be scrutinised at any time. Firstly, that was the reason, secondly, the government will now get a revenue. There is a bunch of taxes to be paid, licence fees are quite high. There is also a stringent procedure, so government will make its revenue and be able to check what the casas de cambio personnel are doing."

Stewart Krohn
"The simple creation of casas de cambio, does nothing to create more foreign exchange. So what is being done to address the situation where merchants or business people are the country cannot get the foreign exchange to pay for their imports? Is the introduction of casas de cambio going to help them?"

James Janmohamed
"The way it will help is it will curtail the use of foreign exchange in other illegal areas. You see, the people who can afford to pay you the most, are the people who can afford to pay that one, and a lot of them in the past have not been in legitimate businesses probably. So what will happen is first of all this will immediately bring down is that those people who will not be able to use the system, which was openly used in Belize for many years, let's face it, without anybody being jailed or anything. So, anybody who was utilising it for their own personal illegal purposes will now be stemmed, they won't be able to do it. So straight away, you won't be able to sell U.S. dollars to those people. You will have to sell U.S. dollars to legitimate businesses. You will only be able to sell twenty-five hundred dollars. Anything above twenty-five hundred dollars will require a Central Bank permit."

Janmohamed emphasised that the system will only work if the laws against illegal currency trading are rigidly enforced. Business people, particularly those in the tourism industry, should note that it is perfectly legal to accept U.S. dollars as payment for goods and services, but they are not allowed to simply exchange currency. The first list of licensed casas de cambio is expected to be published on Friday.

<<in the tourism industry, should note that it is perfectly legal to accept U.S. dollars as payment for goods and services, but they are not allowed to simply exchange currency. >>>

oh oh... This won't make the people at the supermarket happy. Every time I bought groceries they were very "helpful" in letting me know that they would exchange ALL of my money for me if I wished, to make it "easier" for me to shop.

My oversimplified reaction to this is that what the goverment has done is in effect devalued the Belize dollar to 2.15 to one US. This is an attempt to keep the flow of Belize dollars being exchanged at a rate less than what the market is dictating. I think history has shown in the past that goverments are not effective in trying to control currency valuations thru legislation as opposed to sound fiscal management which ultimatly dictates how the market values the currency. The market thru supply and demand will have the final word on this.

This is just another way to squeeze a dollar out of the beleaguered Belizean business person, while allowing a few hand picked "well connected" types to make some money. I predict it will be ignored by everyone except those with no choice.
The people who will suffer will be those who don't have access to dollars in the normal course of business. They will have to pay even more inflated rates when they need to purchase imported goods (which is just about everything, since the monopolies, taxes, fees and permissions imposed by the government discourage anyone from starting a business that produces goods anything.
Everybody loses except government honchos and their "grateful" cotierie of well connected friends.

If anybody in their right mind thinks that this scheme is going to work they are crazy.

The Belize Government does not have sufficient assets to control crime much less
"illegal" currency traders. Or, will the Cambio's have a higher priority than crime?

Do you think that for a minute that resort owners and other business people will refuse to "exchange a few USD to BZ$.
I can assure you that at least 99% would be glad to accept the dollars....then they are crooks to. Will all of these people be arrested.

A stupid law; A law without teeth; A law doomed to failure, A law designed to beneift only a few;

What about the folks that accept a USD Check
and then DHL these to the states for deposit into their USD Accounts.

This type of crap is exactly what makes people want to keep their money in other countries which has created the biggest export commodity in Belize....US Dollars

IT CAN ONLY HURT BELIZE

We need a system that would be conducive to
people not only keeping their money in Belize but also storing their money in Belize Banks.

INSTALLATION OF A USD MONITARY SYSTEM WOULD BE THE MOST LOGICAL FIRST STEP.

This does not take a rocket scientist to figure out and it is not a first....look at Panama. It is starting to flourish and actually threatens to take over the tourism economy in Central America.