Both Sides of The Coin: The Story of The Central Bank of Barbados 1972-2017

Chapter 5: Some Notable Developments 177 Naturally, there was a debate about the ability of the Bank to maintain the exchange rate. “Devaluation would be no surprise” and “devaluation inevitable” were typical headlines. Concerns about falling confidence in the value of the Barbados dollar were said to be evident in neighbouring territories. Only after the programme with the Fund ended did concerns about devaluation abate. 93 Statements attributed to the commercial banks did not help. Under the headline “Money Crisis”, some managers were reported to have said that they had been unable to purchase foreign exchange from the Bank or to repatriate accumulated profits. According to the reports, they also complained about difficulty in getting loans from the Bank to fund customer demand. This news prompted a political commentator to write that, “The Central Bank seems to have abandoned its role as a bank of last resort. It has negative foreign assets and is unable to meet the demands of the banking system or the community.” There were several queries about the Bank’s operations. Questions were raised about the calculation of the NIR, in particular whether pension fund resources should be counted as reserves. The calculation of the import cover also came under scrutiny. That was nothing to compare with other characterisations. Under a headline “Central Bank in disastrous slide”, one writer opined that, “The best contribution the Central Bank can make to Barbados now is to close itself down completely.” Similar sentiments were evident in a column entitled “Why not close the Central Bank?” in which the writer argued that, “Barbados needs a radical change in monetary policy” and promoted the merits of a currency board. Occasionally, there were personal attacks on Governor King. Some individuals called on him to resign while others took him to task for being too silent. One commentator described the governor’s attitude during an interview as “callous” and suggested that a central bank governor should speak out against imminent danger to the economy or resign. However, the most open demand for the governor to go came after the resignations of Sir Douglas Lynch and Sir Fred Phillips from the Bank’s Board towards the end of 1991. Sir Douglas’s open letter of resignation, which was highly critical of the political directorate, ignited rumours about the actions of the