Mayaro MP Rushton Paray is calling for regulatory amendments to ensure fair access to forex.

In a statement, Mr Paray points to the recent decision by Scotiabank to reduce the monthly limit on foreign purchases for personal credit cards to US$3,000 and business cards to US$5,000.

He believes this policy shift exposes deep-seated issues that businesses and consumers face in accessing foreign currency, and underscored the pressing need for regulatory intervention to guarantee a fair and equitable forex framework.

He says economists like have noted that while banks often hold considerable forex reserves, these funds are not adequately channeled into productive activities that benefit local businesses and citizens.

He adds that such accumulation can contribute to inflationary pressures and widen economic disparities.

His release says, “Rushton Paray calls for amendments to the Exchange Control Act to address forex distribution issues. While the Act was initially liberalized in 1993, the current economic climate demands further refinements to its regulatory framework.”

He has proposed several key measures to improve transparency, accessibility, and fairness in forex allocation:

• Mandatory Forex Allocation for Priority Sectors:

Require banks to allocate a specified percentage of their foreign currency reserves to SMEs, essential importers, and sectors critical to diversification.

• Increased Transparency Requirements:

Oblige banks and authorized dealers to publish quarterly forex sales reports, detailing volumes, sector allocations, and customer categories.

• Creation of a Forex Redistribution Mechanism:

Establish a central forex pool managed by the Central Bank, redistributing forex based on priority needs to buffer against supply shocks.

• Enhanced Compliance and Accountability Measures:

Strengthen compliance guidelines with penalties to discourage reserve hoarding and ensure fair distribution policies.

• Forex Diversification Incentives:

Provide incentives for businesses to earn forex independently through export activities or diversified forex sources.

• Real-time Forex Allocation Platform:

Implement a central, real-time platform managed by the Central Bank, promoting transparent transactions and improved forex access.

• Limits on Banks’ Forex Holdings:

Cap the amount of forex banks can hold relative to financial obligations, periodically releasing excess reserves back into the market.

• Central Bank-Mediated Clearing System:

Establish a forex clearing system, enabling Central Bank intervention during severe shortages to support essential sectors.

He adds that regular policy reviews and the establishment of an oversight committee under the Central Bank would help these measures stay relevant and responsive to changing economic conditions.