THE CENTRAL BANK NEEDS TO RETHINK

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Banjul, The Gambia: building of the Central Bank of The Gambia (CBG) surrounded by tree - the CBG issues the Dalasi, the Gambian currency - photo by M.Torres

According to section 161 subsection (4) of the Constitution, the Central Bank of The Gambia has the following functions:

“The Central Bank shall –

(a)   promote and maintain the stability of the currency of The Gambia;

(b)   direct and regulate the financial, insurance, banking and currency system in the interest of the economic development of The Gambia;

(c)   encourage and promote sustainable economic development and the efficient utilisation of the resources of The Gambia through the effective and efficient operation of a banking and credit system;

(d)   exercise such other functions as may be conferred on the Central Bank by an Act of the National Assembly.”

It is the decision of the Bank to allow banks to advertise and lure customers to open and maintain foreign currency accounts. Since it is within the regulatory powers of the Central Bank to add conditionality on the grounds for withdrawing monies from such accounts by depositors, these conditions should have been laid out without any ambiguity to enable banks to include them during their advertisements to enable customers to know the basis for withdrawing any foreign currency deposit.

It is our finding that no condition was conveyed to persons when they were depositing their foreign currencies into foreign accounts opened by them in Gambian banks. After depositing their money without the condition to deprive them to withdraw it in foreign currency, depriving them the right to withdraw all their foreign currency if they do not agree to the condition is to deprive them of an acquired right.

This would be unjust by all standards. There is no doubt that the central bank has the regulatory powers but the regulation should be stated before granting the bank the powers to render service to the customers. Furthermore, the bank should do a thorough analysis and assess the role foreign currency accounts have played in the Gambian economy in terms of attracting remittances from Gambians abroad and accessing foreign currency from abroad.

There are two dangers to be addressed.

One danger which he mentioned is the dollarization of the economy and the other danger which he did not mention is the withering away or drying up of foreign currency. The bank has to choose which is the greater danger at this moment in time. Prudence is required to maintain a financial system and not reliance on speculative theorizing.

A system of justice must not operate on collective punishment. If there is wrong doing in the use of foreign currency deposit in the bank, the wrong doers should be identified and subjected to due process.