Apr 2015 Financial News

Liberalisation a positive move (Barbados)

Apr 27, 2015

MINISTER of Finance and Economic Affairs, Christopher Sinckler, believes the liberalisation of the savings rate is the right move at the right time, to contribute to a more active and more robust financial capital market in Barbados.

The Central Bank of Barbados announced that effective April 21, 2015m it will no longer set the minimum savings rate on deposits, commercial banks and deposit-taking institutions would be responsible for setting its own interest rate.

Sinckler elaborated, “Our Central Bank is normally conservative as well. It ought to be, but it has made a bold decision recently to liberalise the savings rate setting margin in Barbados.

“I would encourage our banks to work with their customers to ensure there is a smooth transition from the fixed operation to the liberalised operation, to take the opportunity to offer such exciting products to their clientele to ensure that is as it ought to be in a modern economy such as ours.”

Beneficial long term
Karen Darbasie, CEO, First Citizens Group, believes, “It is a very recent move. It is early days, but it is also a good indication when we liberalise and allow market forces to dictate the environment of interest rates.

“My understanding is prior to the liberalisation, there were circumstances where savings accounts would have benefited in some cases from higher rates than long term fixed deposits. However, with the liberalisation of the savings deposit rate, market focuses would dictate, and when you need to have easing of the economy to encourage growth, then rates they will come down and when the economy becomes more competitive, rates will go up, so that you will have market forces dictating the interest rate environment.

“In the long terms, as the Minister of Finance said, liberalisation is going to be for the benefit of the environment.

The liberalisation will encourage new banking products to come to the fore and development of some more innovative type products that will allow consumers to get better rates for risk they will be taking when making their investment decisions. Liberalisation allows market forces to dictate what happens, as well as the potential for new products to come to the fore. In overall terms, it is a good thing for the market.”

First Citizens has not determined a rate as yet. (NB)

Source:
Barbados Advocate
Monday April 27, 2015

http://www.barbadosadvocate.com/newsitem.asp?more=business&NewsID=43035