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Feb 3, 2016

Loss of Correspondent Bank Relationships Has Severe Economic Impact

Moody’s Investors Service has just concluded a visit to Belize; the correspondent banking issue was at the centre of discussions with major players. The report issued at the end of the visit is dated February second and entitled Government of Belize Loss of Correspondent Bank Services Compounds Existing Economic and Fiscal Challenge. According to the report, the loss of correspondent banking has now spilled over into the domestic banking sector and could spread to the tourism industry, trade flows and overall economic activity. That’s the bad news, but the good news is that the agency does not foresee a financial collapse.  The report states that challenges resulting from the loss of correspondent banks compound a confluence of risks in 2017 and 2018 with a potential to cause significant losses to sovereign bondholders.  The severing of ties with correspondent banks started in 2014, affecting the offshore sector. The following year in 2015, U.S. and European banks began to cut ties with onshore banks even though the domestic banks appear to be in full compliance with the 2010Foreign account Tax Compliance act, the FACTA and other international banking standards. On his return from Washington, the PM said on Monday that he had received assurances that the Belize jurisdiction is above board and Moody’s corroborates this statement. According to the report, there is no likelihood that new legislation will be introduced over the next year. But the silver lining, says Moody’s, is that a collapse of trade finance seems unlikely since the Central Bank and one or two foreign subsidiaries will continue to be able to process foreign exchange transactions in Belize.

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2 Responses for “Loss of Correspondent Bank Relationships Has Severe Economic Impact”

  1. Innocence says:

    Lone lies central bank is not processing foreign exchange i tried to cash my english cheques and was told that they are not doing so nor will any other bank in belize do so anymore so good luck to all british army vets who have retired or live in belize because they can no longer cash their pension cheques

  2. Primary Thief, Ali BaBarrow says:

    Soon there will be a constitutional amendment to fix this.

    This will keep my fools who I lord over, will toe the line

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