Sat | Nov 27, 2021

Letter | No internal split

Published:Wednesday | May 8, 2019 | 12:25 AM

The Editor, Sir:

We refer to your article headlined “BOJ Downplays Internal Forex Split” in the Sunday Gleaner of May 5, 2019, which contains in the headline and in the body of the article false and misleading statements about the governance of the central bank which, if left uncorrected, will serve to sow confusion in the minds of your readers on a matter of considerable national importance.

The headline and article assert that there is a “split in the views at the central bank” in relation to exchange rate volatility and grounds this assertion on the reported views of an individual who represents one of the industry groups, the JMEA, that is represented on the Foreign Exchange Market Development Committee, FXMDC.

In fact, there is no split in the views at the central bank. The views of representatives of industry groups present at meetings with the central bank cannot in any reasonable fashion be attributed to the central bank. We ask that you correct the misstatements in the article and its headline and publish this letter with equal prominence that was given to the article.

The FXMDC is one of the many consultative committees through which the central bank meets with stakeholders to provide information on its policies, to obtain feedback on proposed policy changes and, in this case, to foster the greatest consensus around reforms to develop a modern foreign exchange market that meets the needs of all of its stakeholders.

Other such consultative committees that meet on a regular basis include the Bankers Committee, the Primary Dealers Committee and the National Payments Council.

The FXMDC itself was formed by the central bank in 2017 ahead of the reforms to the foreign exchange market that began with the implementation of the Bank of Jamaica Foreign Exchange Intervention and Trading Tool, B-FXITT, in July of that year.

Like most of the consultative committees, the FXMDC’s membership is made up of industry associations and not individuals. The associations are entirely responsible for their representatives who speak on their behalf at meetings of the committee. The membership is broad and includes industry groups that represent all of the stakeholders in the foreign exchange market, which include micro, small, medium and large businesses, users of foreign exchange, suppliers of foreign exchange, securities dealers, insurance companies, pension funds and foreign exchange market intermediaries (banks and cambios).

The JMEA’s representative and the head of the PSOJ, to whose views on the foreign exchange market you have given prominence in recent days, are but two of the 13 private sector stakeholder groups represented on the consultative committee.

This kind of consultative committee has been present in one form or another since the inception of Bank of Jamaica in 1961. They are an essential part of an orderly, transparent interface of the central bank with its many stakeholders that is, and is perceived to be, fair and even-handed to all groups.

The FXMDC therefore cannot reasonably be construed to somehow be considered a part of the central bank itself. Consultative committees like the FXMDC are not organs of the central bank, have no permanence and, clearly, can play no role in decision-making and accountability at the central bank. It is therefore fundamentally wrong, and highly misleading, to state or to suggest otherwise as has been done in the article and its headline.

Notwithstanding the gross error in the article, we nevertheless want to express a clear welcome to the interest that is being shown in the workings of these consultative committees. As Bank of Jamaica continues to build up its efforts at enhancing the understanding by Jamaicans of its work, we are pleased to be able to confirm that the participants in the various committees have reason to be justifiably proud of the work that they do in contributing to the smooth running of Jamaica’s financial markets and the adoption of effective reforms that advance the interests of all Jamaicans.

Bank of Jamaica

Nethersole Place, Kingston