EDITORIAL: Bank on short leash

THE REVOCATION of the appointment of Central Bank Governor Dr DeLisle Worrell by Minister of Finance Chris Sinckler may have closed a chapter in the unfolding history of the bank, but the book is not complete on what has been one of the most stressful fortnights in our country’s financial industry. There are more chapters to be written.

Central Bank governors hold the most powerful of non-elected political offices in democracies, and disagreements and clashes between ministers of finance and governors are not new.   

Disputes may arise, more often than not, when political considerations are persuading the minister to adopt policies in opposition to the aims or advice of the Central Bank, whose principal spokesman is its governor.

In the present situation accusations of strained relations between senior management and the governor appear to have been as crucial to the impasse as the recent statements of the governor on the printing of money and his prognosis on the health of the foreign reserves that if the printing of money was not stopped, devaluation might be our fate.

In the best of circumstances the sharpest discernment and discretion are required skills for governors, who have to be careful about not straying into embarrassing the Government of the day by public statements or actions. Our first Governor Sir Courtney Blackman best illustrated the exercise of this discretion when he avoided criticism of his minister by declaring the truth that as governor, he was a creature of the Minister of Finance.

Yet the issues are not only those of discretion and discernment. It is also about the independence of the Central Bank, a key topic which is often avoided. Management problems apart, the printing of money, the fiscal deficit and falling reserves are matters that have troubled most, if not all, local economists who have commented on recent events.

We, too, are of the opinion that this trio of concerns, if not attended to, will damage the national economy and adversely impact all Barbadians. The general secretary of the Democratic Labour Party, George Pilgrim, confirmed the uncomfortable reality into which the economy had fallen when he spoke of the need to print money in order to pay the wages of public servants.

Our Central Bank was established with a statutory responsibility to promote monetary stability, and if it is now accepted that the uncontrolled printing of money may endanger the fixed exchange rate of the Barbadian dollar, we cannot expect any governor to remain mute if he thinks that the stage has been reached when the printing of money has to stop.

Since it is clear that Sir Courtney Blackman’s statement still holds true, it may well be that clear guidelines are required where problems arise between the minister and the governor or between the governor and the board. 

And if the bank is not to become a mere rubber stamp of Government’s policies and bound to carry them out, however ruinous of the local economy those policies might be, then some measure of independence may have to be bestowed on the bank.

We are of the opinion that public disputes between the governor and the Government are not in the public interest, but, equally so, no Central Bank can be allowed to frustrate the legitimate aims and policies of the Government.

What is now necessary is a rational debate about how much independence the Central Bank should have to enable it to carry out its duties under the act.