CBSI governor holds top level discussion with New York Fed reserve and Crown Agent Bank
By Alfred Sasako
PAN Oceanic Bank’s (POB’s) inability to establish a US dollar correspondent banking relationship (CBR) has the potential for causing instability in our financial system and the economy, the Central Bank of Solomon Islands (CBSI) disclosed on Monday.
This is the first time the CBSI has publicly acknowledged the seriousness of the US Dollar correspondent banking relationship issue and the implications for the country.
Governor Denton Rarawa is now in Indonesia for talks on the matter with senior executives of the Federal Reserve Bank of New York and the Crown Agent Bank.
“I will hold discussions with senior executives of the Federal Reserve Bank of New York (FRBNY) and Crown Agent Bank in Bali tomorrow [today] to continue our efforts to get Crown Agent Bank to set up a US dollar correspondent banking relationship (CBR) with POB.
“Why is the Central Bank doing this? Because, it is in our interest to mitigate potential instability in the financial system and the economy and because we have confidence in the operations of POB in the country,” Mr Rarawa said.
Rarawa was responding to allegations raised in a lengthy letter, which Island Sun passed on to the CBSI for comments yesterday.
Among other things, the writer Dr Eroni L Taukalo made sweeping allegations linking police, CBSI staff as well as two POB Board Members whom he said were named in the Panama Papers as international money launderer.
“Thank you for your email. I am currently travelling hence not in a position to determine the veracity of the letter but it appears it is from the same person or group that widely circulated an email with similar allegations two weeks ago.
“I am not sure what is motivating this person/group and why they are attacking POB but I can say that the allegations in the letter are not true. The Central Bank has confidence in POB’s operations and will continue to support its activities, like any other bank in the country.
“So I would like to reiterate the Bank’s earlier call for those people spreading these misleading allegations to stop doing so because they are undermining our efforts to assist POB secure a CBR to protect the stability of our financial system.”
Rarawa urged POB customers “to continue to conduct your banking business with POB as normal”.
He did not respond to a follow-up question as to what happened should the Bali talks fail.
Island Sun understands that the Federal Reserve Bank of New York has given the CBSI until December to fix the POB CBR issue or face being denied the use of an US Dollar Account.
Such a scenario would spell disaster for the nation because we use the US currency for all our external trade.