Swan repeats call to ditch Bermuda dollar

Raymond Hainey, Assistant News Editor

Published Oct 30, 2018 at 8:00 am (Updated Oct 30, 2018 at 6:32 am)

Different viewpoint: former premier Sir John Swan

Bermuda must look at ditching its own dollar in favour of United States currency, Bermuda’s elder statesman has said.

Sir John Swan floated the idea in an opinion piece on potential changes for Bermuda published in The Royal Gazette this month, which sparked protests from some and suggestions that the US under Donald Trump was on the wane compared with China.

But Sir John said: “Any major change encounters resistance. Again, it’s out there for discussion.

“I read the comments and they talk about the demise of the United States. Let’s put that to rest — America is, and will remain for the foreseeable future, the most powerful country in the world.

“It has the physical resources and the intellectual resources.”

He added: “Politics doesn’t play a strong role in the long term in America because of its democracy. The public can change things.

“We are in the American sphere for security reasons, for trade reasons and because of a lot of relationships. Even though we fly the British flag, we’ve always had the advantage of having both sides on our side.”

Sir John’s opinion piece said the island should adopt the US dollar because the purchase of goods and services and even borrowing was converted into US dollars.

He warned that the move should come before lender banks reduced the island’s ability to borrow because of its currency imbalance.

Other suggestions included the creation of a free-trade zone in Hamilton, the encouragement of foreign investment in major projects like the redevelopment of the city’s harbourfront and the promotion of financial technology, known as fintech, including the introduction of new banks.

Sir John said: “My idea was to take the risk out of Bermuda dollars and put it into US dollars.

“I suggested that could then allow banking with limited facilities which Bermudians and non-Bermudians could do business with.”

However, Sir John said: “I would encourage the public not to look at what I said as a fait accompli. It’s doing what I hoped it would do — stimulate thought and conversation.”

He added: “The object of the exercise would be to look at the Bermuda dollar in a slow-moving and less stressed financial world when the country didn’t have the depth of exposure it has now to the US dollar.”

He said that Bermudians who had invested overseas were “less inclined” to bring their money home.

Sir John added: “The big people in the marketplace right now are not Bermudians buying and selling, but Permanent Resident Certificate holders.

“We have already started the process of foreigners investing in Bermuda. The average Bermudian has properties which have been devalued and rents which have been devalued — that’s residential and commercial.

“You can pick up a building now for what you used to pay for a piece of land.

“The only thing saving us now from the big players, the insurance and reinsurance business, which have been in a state of quiet consolidation through acquisitions and mergers.

“That’s our lifeline now so we need to start looking for other sources of income.

“I don’t discount tourism, but that still does not help the average person who needs income that’s harder and harder to come by.”

Sir John added that the Government took a fee when Bermuda dollars were converted to US dollars, but that any shortfall could be made up from other sources.

He said: “Fintech, which cryptocurrency is a part of, is the way in which business will be done in the future.

“That can be done with or without cryptocurrency. It’s being done. Banks and institutions around the world have adopted it.

“Blockchain, for instance, there are no barriers to blockchain, but there is a barrier to cryptocurrency because it doesn’t have a defined exchange.

“We don’t need to have cryptocurrency to do a lot of things with fintech, but we still need banking for cryptocurrency because it is a way business is being done.”

Sir John added: “The Government is on the right track and I hope it’s able to find a bank that would embrace cryptocurrency.”

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