Go Lean…Caribbean

Go Lean Commentary

Money is more important in society than people are willing to accept. Though some critics say that love, family, faith, country and other principles are more important. But an obscure Murphy’s Law states (and is quoted in the book Go Lean…Caribbean at Page 32) this ironic truth:

“When people claim that it’s the principle, and not the money, chances are, it’s the money”.

There are indeed more important things in life than money, but somehow all these things can be bought/sold … for money. The strategy in this Go Lean book is to optimize money issues: consolidate monetary reserves for the region into a Single Currency, the Caribbean Dollar (C$), managed by the technocratic Caribbean Central Bank (CCB). The C$ will be based on a mixed-basket of foreign reserves (US dollars, Euros, British pounds & Yens).

This is a simple but effective plan – a best practice: introduce the Caribbean Central Bank (CCB) and Caribbean Dollar as a Single Currency for the region’s 30 member-states.

Huge benefits abound! And so this economic initiative is important for Caribbean elevation. The rationale is that this strategy “enables economies to be more resilient to exogenous shocks”.

exogenous shocks – In economics, a shock is an unexpected or unpredictable event that affects an economy, either positively or negatively. Technically, it refers to an unpredictable change in exogenous factors — that is, factors unexplained by economics — which may influence endogenous economic variables. – Wikipedia.

This benefit is so obvious that others have thought of this before …

Yet there has consistently been a Failure to Launch this economic initiative; or to do so successfully. Consider the historicity of the CariCom Multilateral Clearing Facility (CMCF) in Appendix A below – a normal functionality of regional Central Banks.

Currently, the Caribbean has no regional Central Bank, so safety-net, no shock absorption, and no integration. This is the quest of the book Go Lean…Caribbean; it urges the introduction and implementation of the Caribbean Union Trade Federation (CU) and the Caribbean Central Bank (CCB). The book serves as a roadmap for this goal, with turn-by-turn directions to integrate the 30 member-states of the region and forge an $800 Billion economy.

We have the great models of the United States and Europe to consider how a Single Currency can positively impact a consolidated regional economy; see VIDEOs in the Appendices below. We do not have to invent innovative solutions on our own; we can simply model the best-practices of these other communities. This is the familiar advocacy for the movement behind the book Go Lean…Caribbean. In a previous blog-commentary from May 10, 2014 the merits of Single Market and Single Currency economic integrations were related as follows:

Europe has the safety net of the economies-of-scale of 508 million people and a GDP of $15 Trillion in 28 member-states in the EU; (the Eurozone subset is 18 states, 333 million people and $13.1 Trillion GDP). The US has 50 states and 320 million people. Shocks and dips can therefore be absorbed and leveraged across the entire region .The EU is still the #1 economy in the world; the US is #2. – [See related VIDEO here: https://youtu.be/vRzFAvgBhU0.]

The Go Lean roadmap signals change for the region. It introduces new measures, new opportunities and new recoveries. Exogenous shocks are a reality. Economies will rise and fall; the recovery is key. Prices will inflate and deflate; there are very effective measures – at the regional level – for managing all these indices. The Go Lean book serves as a roadmap for the establishment of the Caribbean Union Trade Federation (CU), and the allied Caribbean Central Bank (CCB) to manage the monetary-currency affairs of this region. The book describes the breath-and-width of the CCB and the Caribbean Dollar Single Currency.

The book Go Lean…Caribbean also detailed previous (inadequate) attempts to integrate Caribbean currencies …

… this commentary is the 2nd of 4 parts in a series on the Caribbean’s Failure to Launch solutions to elevate the region’s societal engines. The full series is catalogued as follows:

1. Failure to Launch – Past Failures for Integration
2. Failure to Launch – Economics: Caribbean Central Banks and the Quest for a Single Currency
3. Failure to Launch – Security: Caribbean Basin Security Dreams
4. Failure to Launch – Governance: Assembling the Regional Alphabet Organizations

In the previous submission – Part 1 of 4 – the history of the failed West Indies Federation was detailed. This effort only related to the Anglophone countries but among its many initiatives was the plan to introduce a consolidated currency. This excerpt is derived from the Go Lean book’s Anecdote on Caribbean currencies relating English-speaking and other language groups:

The diverse colonial Caribbean also had Spanish (Cuba, Dominican Republic and Puerto Rico) islands and Danish territories, as in today’s US Virgin Islands.

There would be many benefits if multiple countries come together and finally form a Single Market-Single Currency economy. This is the quest for the CU/Go Lean roadmap: to form a Single Market-Single Currency of the Caribbean Dollar (C$).

This CU/CCB/C$/Go Lean roadmap therefore urges this Single Market / Single Currency effort with these 3 prime directives:

• Optimization of the economic-banking engines in order to grow the regional economy and create 2.2 million new jobs.
• Establishment of a security apparatus to ensure public safety and protect the resultant economic engines.
• Improvement of Caribbean governance to support these engines, including a separation-of-powers between the member-states and CU federal agencies.

Central Banks are required to …

1. facilitate monetary and currency policies,
2. oversee bank regulations, and
3. execute inter-bank financial transactions (like payment settlements described in the Appendix A below regarding the previous CMCF).

Presently, the Caribbean region has no integrated Central Bank, nor have we ever had one in the past. There has always been a Failure to Launch this needed solution. Even the Anglo-Caribbean’s previous offering of the CMCF only addressed one of these 3 central banking functionalities: payments. Unfortunately, we need them all! We need to launch a fitting solution to assuage all Caribbean’s monetary-currency deficiencies.

(Puerto Rico and the US Virgin Islands monetary needs are managed as a subset of the Federal Reserve Bank of New York; 2600 miles away from their territorial markets).

A Single Currency in the Caribbean – for the Caribbean – is a BIG idea for reforming and transforming the economic engines of the 42 million people among the 30 member-states (including Puerto Rico and the US Virgin Islands). The Go Lean book stresses that our effort must be a regional pursuit, and it must also optimize our currency landscape. This was an early motivation for the roadmap, as pronounced in the opening Declaration of Interdependence (Pages 12 – 13):

xi. Whereas all men are entitled to the benefits of good governance in a free society, “new guards” must be enacted to dissuade the emergence of incompetence, corruption, nepotism and cronyism at the peril of the people’s best interest. The Federation must guarantee the executions of a social contract between government and the governed.

xxiv. Whereas a free market economy can be induced and spurred for continuous progress, the Federation must install the controls to better manage aspects of the economy: jobs, inflation, savings rate, investments and other economic principles. Thereby attracting direct foreign investment because of the stability and vibrancy of our economy.

The Go Lean book provides 370-pages of turn-by-turn instructions on “how” to adopt new community ethos, plus the strategies, tactics, implementations and advocacies to execute so as to reboot, reform and transform the societal engines of Caribbean society. There is a lot of consideration in the book for establishing the CCB and the Single Currency in the region. The Caribbean’s Failure to Launch this in the past is … inexcusable.

There have been a number of previous blog-commentaries by the Go Lean movement that have highlighted the eco-system of monetary, central banking and currency best practices. See a sample list here:

In summary, shepherding the economy is no simple task; the regional economy, even harder still – described as heavy-lifting. It requires the best practices of skilled technocrats. But the benefits of the heavy-lifting are too alluring to ignore: growing the monetary supply, expanding the availability of investment capital and leveraging across a larger base to absorb the shocks naturally associated with a Free Market Economy.

We are past the time of needing this Caribbean Dollar Single Currency reform. We needed it 60 years ago, and even more now. We must not fail to launch …

We urge all Caribbean stakeholders – government officials, bankers and ordinary citizens – to lean-in for the innovations  and empowerments detailed in this CU/CCB/Go Lean roadmap. It is so obvious; these are among the best practices of America and Europe! The successful delivery of this banking-economic-currency solution can make our homeland a better place to live, work and play. 🙂

Download the free e-book of Go Lean … Caribbean – now!

Sign the petition to lean-in for this roadmap for the Caribbean Union Trade Federation.

————

Appendix A – Caricom Multilateral Clearing Facility: A Brief Note

Payments clearing and settlement in the Caribbean has historically been a battleground of discontent. There have been many attempts since the Colonial period to structure the payments landscape but none of these efforts have been successful. This blog will briefly outline one such effort — the Caricom Multilateral Clearing Facility.

…

The Caricom [Caribbean Community]Multilateral Clearing Facility (1977–1983) introduced a centralized accounting system for all eligible payments institutions within the region. The original agreement establishing the CMCF was signed by the Central Bank of Barbados, the Monetary Authority of Belize, the East Caribbean Currency Authority, the Bank of Guyana, the Bank of Jamaica, and the Central Bank of Trinidad and Tobago.

The Central Bank of Trinidad and Tobago (CBTT) acted as the agent bank for the CMCF. That is, the CBTT carried out the secretariat functions as well as being responsible for the accounting records and distribution of cash settlements.

The main objectives of the CMCF were to:

1. facilitate settlement on a multilateral basis of eligible transactions between participating countries;
2. promote the use of currencies of members in settling eligible transactions between the individual countries, thereby economizing on the use of foreign exchange; and,
3. promote monetary co-operation among the participants, thereby contributing to the expansion of trade and economic activity within Caricom.

Advantages of multilateral clearing to regional banks:

1. reduction of correspondent deposits in foreign exchange
2. longer time for investment of deposits where drawn cheques are in circulation within the region

Disadvantages of multilateral clearing to regional banks:

1. legal implications arising from fact that the CMCF was not established as a separate legal entity
2. lack of formal enforcement mechanism in the event of debtor default
3. need for an independent regulatory body
4. technical and administrative complexities

The failure of the CMCF was caused by its abusive usage by some member countries. Instead of being used for its primary purpose of simply minimizing the foreign exchange requirement for intra-regional trade, some members saw it as a balance of payments support facility to allow them to continue purchasing goods which they otherwise would not have been able to. Thus the closing of the CMCF was only inevitable because of the overuse of its informal credit facility.

After the closing of the CMCF the region regressed to a costly nexus of bilateral agreements which offer far less efficiency than multilateral systems.

The demise of the CMCF was unfortunate because it was a clever device for effecting small but significant economies in the use of foreign exchange. In fact, the CMCF might have formed an institutional base for a federal system of Caricom central banks.

Source: CMCF and Caricom Trade. Ginne Lea Miller, 1993

Source: Retrieved December 11, 2017 from https://medium.com/@RJGriffith/caricom-multilateral-clearing-facility-a-brief-note-ab5085a9c8d1

————

Appendix B VIDEO – The U.S. Federal Reserve Bank – How it Works, and What it Does – Money, Dollars, & Currency – https://youtu.be/y1OJlJ9COg0

Bright Enlightenment

Published on Dec 25, 2012 – The U.S. Federal Reserve Bank – How it Works & What it Does – Money, Currency, & the Dollar
– SUBSCRIBE to Bright Enlightenment: http://www.youtube.com/BrightEnlighte…
– LIKE our page on Facebook: http://www.Facebook.com/BrightEnlight…
– TWITTER: http://www.twitter.com/BrightEnlight
– WEBSITE: http://www.BrightEnlightenment.com/

• Category: Education 
• License: Standard YouTube License

————

Appendix C VIDEO – ECB and the Eurosystem explained in 3 min. – https://youtu.be/TAlcFwGIQBg

European Central Bank

Published on Sep 26, 2013 – Who takes care of the “euro”? What is inflation ? Why is price stability important for you? Find the answers to these questions and more in this three-minute introduction to the ECB and the Eurosystem’s role and tasks. To discover more about the ECB, please visit http://www.ecb.europa.eu/ecb

• Category: News & Politics 
• License: Standard YouTube License