The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian investments in international stocks, securities and real estate "didn't quite hit" the predicted $250m mark for 2023 "but came close", the Central Bank's governor revealed yesterday.

John Rolle, addressing the monetary policy regulator's first quarter economic briefing, disclosed that overseas portfolio and property purchases via the investment currency market (ICM) exceeded $200m - sum higher that "we would have seen in any era before".

Responding to Tribune Business questions, he suggested that 2024 investment flows via the ICM may decline slightly year-over-year as 2023's activity was boosted by investors taking advantage of a limited timeframe in which to acquire cut-price Bahamian government bonds denominated in US dollars.

"I think in 2024 the numbers might look a little bit more tempered only because last year there was also a significant amount of activity related to persons who took advantage of the under-priced debt of the Government in US dollars on the market," Mr Rolle explained.

"Last year we would have seen in the investment currency space numbers that look close to a quarter-of-a-billion dollars... We don't think we quite hit the quarter-of-a-billion dollar mark, which we thought we would have hit, but we came close. We were above the $200m mark, and that would have been more than we would have seen in any era before in the investment currency space."

The investment currency market is frequently used by Bahamians, acting individually or through broker/dealers and financial advisers, as well as institutions to acquire overseas stocks, securities and real estate. The premium on investment currency market purchases of foreign currency was previously lowered to 5 percent, and has remained there for several years, helping to encourage activity.

Mr Rolle, meanwhile foreshadowed further liberalisation and easing of the administrative functions surrounding The Bahamas' foreign exchange regime, with a focus on "defining limits" for how much overseas currency individuals can access via commercial banks without having to obtain the Central Bank's approval first.

"The Central Bank is also taking a very cautious and measured approach to further liberalisation of exchange control measures. After the forthcoming consultation with the Government, we anticipate a further shift in delegated responsibility for investment currency market transactions to commercial banks, and some increased delegation for commercial banks to approve other foreign exchange transactions," the Governor explained.

Responding to further Tribune Business questions on the issue, Mr Rolle added: "The emphasis is on shifting the system even more in the direction of individuals being able to go directly to commercial banks to complete transactions without getting initial approval from the Central Bank.

"We are going to look at how we can define limits even for investment currency that the commercial banks can facilitate for individuals, and there are certain categories of non-investment transactions - what we typically refer to as current account transactions - where there's room to allow commercial banks to operate with higher approval limits.

"Again, the intention there would be there's less need for individuals to come to the Central Bank for prior approvals." Elsewhere, Mr Rolle said "very good progress has been made" in advancing plans to establish a Bahamian mobile collateral assets registry, with recent "tidying up" revolving around the roles and ownership interest that both the Central Bank and the Government will have.

"We've had very good progress on the mobile collateral asset registry," he added. "We are at the stage where very soon we should be able to have a public consultation on the draft legislation. A part of the tidying up to this point was continuing to define the role of the Central Bank in a future registry against some of the other registries that exist in The Bahamas under the Government's purview.

"We have been having these conversations with the Registrar General's Department and the Attorney General's Office, and we believe we have arrived at a good medium in terms of how the Government can also play a role in what the structure and ownership of the register looks like. That's ahead of us.

"We should be progressing beyond this point with the Government's involvement into how we specify the build-out of the registry as well as how the Government and the Central Bank look to identify who can provide the technology."

The effort to develop a mobile collateral asset registry in The Bahamas is now into its fourth year given that the project was initially unveiled in December 2020. Its creation would enable businesses and individuals to pledge "moveable assets" as security for bank loans and other forms of credit, while lenders could record and secure their interest over vehicles and any assets pledged as loan collateral.

Asked by Tribune Business about the benefits a mobile collateral asset registry would bring, Mr Rolle replied: "It's almost impossible to quantify, but the prospects are very positive because it does not limit the kind of assets or collateral that individuals can use as long as they are quantifiable and can be registered and secured.

"Most people think about accounts receivables, but even with categories of intellectual property or anywhere there is a structure with revenue potential there is going to be a means to register those assets and collateralise them where necessary to obtain credit.

"In addition, a collateral assets register would allow even certain categories of financial assets - even investment instruments - to be tabled as security for credit, so it does really expand the range of possibilities and it affords that access both to traditional lenders and also to any two parties that might want to structure a lending agreement even if they are not traditional financial institutions."

Elsewhere, Mr Rolle said the credit bureau has "been making progress in terms of getting the credit unions up to standard to begin to provide data" on borrowers in the format that is required.

While there "are some residual pockets of stakeholders where the credit bureau is working to get them fully on board", the Governor added that the major lenders - the banks - are all providing the necessary data and also starting to use the reports provided to them to assess borrower creditworthiness.

Mr Rolle said the Central Bank also plans to start "deepening the interaction with commercial banks" over the roll-out of the Bahamian digital dollar, the Sand Dollar, as it starts "to set targets to improve the overall experience in terms of the speed and timeliness of retail payments".

While conceding that the process was "slightly off schedule", he added that Central Bank expects to complete application upgrades during the 2024 first quarter that will allow persons to "more directly onboard" to Sand Dollar via their mobile wallet accounts. And individual payment providers still have to enable their systems to accommodate the "two-way flow" in and out of mobile wallets.