Excess Liquidity in Belize Banks Linked to Scotiabank-Belize Bank Merger

Excess Liquidity in Belize Banks Linked to Scotiabank-Belize Bank Merger

While some loans had to be written off due to the Covid-19 impacts, the current situation with the banks show that there is excess liquidity.  This means that money is available to borrow, but, according to Central Bank Governor, the excess has to do with the recent bank merger that occurred between Scotiabank and the Belize Bank.

Kareem Michael, Governor, Central Bank of Belize: “Liquidity is at a record level but that liquidity is concentrated in largely concentrated in one commercial bank. Now that commercial bank has certain structural deposits that need to be addressed and once those are addressed I think you will see a lowering of liquidity and I say structural because a lot of that liquidity is as a result of a merger that took place and once that is unwind out of you will see liquidity take a little bit of a decrease but you’re right we also want to encourage lending more, the other variables which we look at such as foreign assets, impact on our balance of payments, lending would not result in any situation where reserves are threatened through higher imports. So we want to urge banks to lend but we don’t want to, I have a good grip whether or not there is other more blunt penalty that the Central Bank can use and some of those being floated is a tax on excess liquidity. I don’t have an informed position on that yet. I would say that lending has picked back up and if you look at where the liquidity is concentrated then it complicates the Central Bank’s response to address that because it’s not across the board.”

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