THE Governor of Central Bank Denton Rarawa has clarified that Central Bank of Solomon Islands is not an agent of Pan Oceanic Bank to receive its Letters of Credit(LC)but only facilitates to ensure stability in the economy.
Speaking during a press conference yesterday Mr Rarawa clarified, that after Westpac Bank closed all logging company accounts, CBSI stepped in as an interim arrangement to facilitate payments.
“CBSI has the responsibility to ensure that the country’s financial system is stable and not disrupted,” Rarawa said.
He said at the moment CBSI is still facilitating logging payments since the financial institution that could have facilitated these payments is yet to establish its correspondence with the loggers bank in Singapore.
“This was after Westpac bank closed all logging company accounts.”
Rarawa said Westpac’s withdrawal has posed a huge concern to the government which could likely have a great impact to the economy since the logging sector accounts for most of the country’s gross domestic product (GDP).
He said due to that CBSI has to act accordingly to ensure stability in the economy.
“By having Pan Oceanic Bank(POB) as a new financial institution into the banking sector can smooth out this situation.”
Rarawa said CBSI is currently facilitating payments on their behalf since they have not yet established a Relationship Management Arrangement(RMA) with an overseas bank that loggers have banked with in Singapore.
He said reports stating POB is finding it hard to establish correspondence with banks overseas to receive Letters of Credit (LC) is not true.
“POB has established correspondence with other banks around the world including three in Singapore, five in Taiwan and two in Korea.”
He said the public need to understand that establishing these RMA’s are done by banks according to their strategic interests.
Rarawa said once this correspondence (RMA) is established, CBSI will stop facilitating these payments.
However CBSI Governor said although POB does not establish a RMA with the loggers’ bank in Singapore, there are other options that can be done for the payment of LCs to POB.
CBSI explained that there are three options or routers that payments can be done through banks that POB has established correspondence with.
The first option could be to make the payments through POBs correspondence in Singapore, to New York, to Siri Lanka and then to POB in Solomon Islands.
Another would be from bank in Singapore, to Dubai, to New York, Colombo and then POB in Solomon Islands.
And the third option could be to make a direct payment from a buyer’s bank in Singapore to POB .
CBSI boss said this could be done by notifying exporters to advice their buyers to bank with the bank that established RMAs with POB.
CBSI said POB has the capacity to arrange for loggers, however while the arrangements are still in process, CBSI has to take the responsibility on the interim to facilitate the payments.
Rarawa said what CBSI did does not in any way compromise the Bank’s independence since the act does allow it to do what is necessary to ensure stability in the financial system of the country’s economy.
By DANIEL NAMOSUAIA