On Tuesday we told you about what the Prime Minister said at the Summit of the America's about the perilous state of Belize and the Region's banking industry after draconian anti money laundering measures were enacted by the US Government. He said, quote,
"there is a crisis in my own country....where the big US banks are 'de-risking' by terminating their correspondent relationships with our domestic banks." Now, if you don't know, that correspondent banking relationship is the bedrock of the international aspect of local banking - that's who the banks rely on to conduct all their international transactions, such as wire transfers. Simply put, these correspondent banks - mainly the bank of America in New York - make it possible to get money from one country to another - without them, international commerce becomes impossible.
Today the Prime Minister walked back somewhat from his characterization of it as a crisis; he said no banks have yet lost their correspondent banking relationship.
Hon. Dean Barrow, Prime Minister
"The banks here still have corresponding banking relationships. If there is going to be some rush to the exits, it appears that first of all the international banks, the offshore banks are the ones that would be first to see the plug pulled. But even that has not yet happened, although there are these ominous mutterings, these rumblings. So while we can't fall asleep at the switch. While it is a very urgent and important matter, I don't want to overstate the case by giving the impression that the crisis has already occurred and that we're looking at the collapse of the banking system. No, not there yet, not by a long shot, we just want to make sure we never get there."
And that's the hope throughout the Caribbean and Central America - where US Banking regulations are putting a deliberate hurting on the services sector. It was discussed at the recent Caricom - US Summit in Jamaica and at the Summit of the America's. And when US President Barack Obama met with SICA, the Prime Minister says he put it very squarely to him:..
Hon. Dean Barrow, Prime Minister
"That issue was very much on the agenda. I raised that as you know, in that speech and at the SICA Caucus with Obama on the Friday. My intervention was strictly about that. Obama in responding to me made clear that apart from the issue having already been flagged, there too before in Jamaica, the president of panama, who was host of the summit and who was host, had a special one on one with Obama bilateral meeting. He had also raised the issue with Obama because what is happening is not anything confined to Belize or peculiar to Belize. The big banks in Europe and America are de-risking as you said because of all the compliance, that ticket of compliance regulations. The President accepted that if it's followed through to its logical conclusion, will completely throttle the economies of small countries. As I've said, you can't be there with all this mighty noble soaring rhetoric about prosperity and stability, if you're going to place us in a situation where our economies can't survive."
CARICOM and Central American Leaders will follow up with letters to President Obama - as they monitor progress over the next one to two months.