EFFICIENT AND EFFECTIVE CENTRAL BANK IS DESPREATE NEED IN SOMALILAND TO SURVIVE FROM ECONOMIC INSTABILY AND OVERNITE INFLATIONS

I will just come out and spell it, Good job Mr President you have accomplished so much since you took over the Office, Infrastructure wise you have proven that you had plan in the first place, east to west, Road construction projects are under implementation, in addition let’s not forget the government office buildings which this administration geared up to the international standard.

I believe since we have passed both reconstruction and humaniterian need status WE have to buckle up once again and face a real development path, where so much of the work will be done by pen and its withholding expertise, let’s call the economic development need that we are having from the bottom of our nation till up to a level where we have no clue how much exactly does our resourses worth, lack of favorable banking system LACK OF CENTRAL BANK, is not going to assist this nation where private with undisclosed intentions runs the monatery system of the country, no commercial banks has any right to develop digital cash or has the freedom to set the exchange rates, financial instability, overnight inflations is what we get when we continue to use those without a consent of a central bank, those of you who are the economists of this country are obligated to contribute the expertise in need right now because those functions that a central bank would do these people will not translate it self into an understandable duty performed by our central bank clerks. First, the Bank is the only institution entitled by law to issue paper money in the Countries Curacao and St. Maarten. The Bank also is charged with the circulation of coins.

Second, the Bank supervises banking and credit institutions to guarantee depositors and other creditors funds at banking and credit institutions in particular and the soundness of the financial sector in general.

Third, the Bank manages the foreign exchange reserves of the Netherlands Antilles, which includes regulating of the transfer of payments between residents and nonresidents of the Countries.

Finally, the Bank acts as the government’s treasurer by receiving and making payments from and to the public through the tax collector’s accounts at the Central Bank.

To strengthen the Central Bank’s independent position vis-à-vis the government, the Bank Charter limits the monetary financing of budget deficits to 10% of the central government’s revenues in the previous year. This limitation must be seen in the context of an overdraft facility to meet liquidity deficits of the public sector that result from seasonal variations in government revenues. central banks have financed by governments, used allocation methods and subsidies to engage in “sectoral policy” and have attempt to manage the foreign exchanges, often with capital and exchange controls of various kinds. The current “best practice recipe”, then, goes against the history and tradition of central banking in the countries now most strongly promoting it. The question, then, is NOT whether central banks have or should pursue developmental policy, but rather: what kind of developmental policy should they conduct? Here history also gives some guidance. Central banks have been most effective in helping to foster development, especially in “late developers”, where they have been part of the governmental apparatus of industrial policy. Through out this history, a continuing tension has existed between the developmental roles of central banks and the stabilizing roles. Yet there is little evidence that the optimal solution to this tension is to abandon the developmental role entirely. Worse yet is to do – as many central banks under IMF tutelage have done – follow the lead of England and the U.S. as described earlier, and focus its developmental role entirely on promoting the financial sector, especially the fashionable “stock market based” financial sectors. There is little evidence that the stock-market based financial sectors promoted these days in many developing countries leads to faster economic growth or more development (Zhu, Ash and Pollin, 2004). Worse yet, promoting the financial sector through internal and external financial liberalization can make developing countries highly vulnerable to financial panics and crises, as we saw with the Asian financial crisis. (eg. see, Epstein, 2005b). Thus, rather than resolving the tension between the developmental and stabilization central bank roles, this financial sector promotion approach associated with financial liberalization and neo-liberal central banking poses the danger of making the tension even worse.

WRITTING BY Mohamed Obolos