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View From Afar: Debunking The Myth Of Exchange Controls

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John Issa

By JOHN ISSA

THE Central Bank continues to ease exchange controls. This is a good thing. However, I again ask why the fear of completely removing exchange controls?

Those against the elimination of exchange controls usually frighten the public and government officials with the fear of currency flowing out of the country like a fast moving river. We should learn from history. When the UK had exchange controls foreign currencies stayed off shore. After their removal the UK has been a haven for all currencies as well as precious metals.

An example closer to home is Jamaica. Since removing exchange controls, foreign exchange has flooded back to Jamaica. Almost half of the deposits in Jamaican banks held by Jamaicans are held in foreign currencies. The removal of exchange controls has not only stopped the panic to get money sent overseas but has seen Jamaicans bringing their overseas funds back home.

The other big fear promoted by opponents of the removal of exchange controls is that the Bahamian dollar will devalue. The removal of exchange controls does not cause the devaluation of a currency. The printing of too much currency is the cause of a currency being devalued. The printing of too much currency is totally in the control of the Government. Once there are no controls, foreign currency flows freely into and out of a economy as needed. With exchange controls there is a constant effort by Bahamians to spirit funds overseas and keep it there because they can’t take it out freely.

Do you know anyone who has not been able to get what foreign exchange they have needed sent overseas whether by legal or illegal means? I have never met one. Case closed: exchange controls keep money out of a country, not in.

• John Issa is executive chairman of SuperClubs. He is writing regularly in The Tribune.

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