The CBSI does not appear to have a specific response to the global financial crisis. The reason as stated in my previous letter to the editor could be related to having our financial system being fluid and not exposed to global financial markets in a significant way. The recent depreciation of SBD to USD may slightly help our export commodities, nonetheless CBSI core policy stance, I assume, is not crisis driven.

Quite contrary to what the countries affected by the global financial crisis and recession are pursuing, CBSI is trying to mop excess liquidity from the system in order to slow down lending activities, and help control inflation. This has been done by way of influencing the commercial banks to increase there domestic savings rate. My recent enquiry with one of the commercial banks confirmed that the policy has worked.

But what impact can we anticipate on borrowers including those who have borrowed through the CBSI credit scheme? In my view one of the primary roles of CBSI has been on safeguarding the integrity of the banking system, which some rightly see it as supporting the commercial banks. While the rural poor may generally benefit from this statutory responsibility and the economic management function of CBSI, my puzzle is what role could it play to further help rural finance? Has there been further development in revitalizing rural credit unions? In 2005 I remember reading an article about a workshop CBSI organized to look at ways in which rural finance and credit could be further developed. The loan guarantee scheme revived in the CBSI for small businesses was perhaps resulted from this, but my understanding is that it is a Government funded initiative.

Others experiences tell me that the performance of most credit unions has been less encouraging. This should, however, not be the end unless CBSI and the Credit Union League think otherwise. In my view CBSI in the past years, has been sitting on a comfort zone with the direct association and advice from IMF. While in comfort they sometimes criticize the Government for not doing enough for the people, not managing its budget properly, for over sizing the public service, and for poor discipline.

While one cannot totally refute these, CBSI should be prepared to serve the people more in the years ahead. If they are better organized, and better disciplined than other Government institutions, they should be more proactive and play a more collaborative role to help manage our economy with the Government.

Happy Christmas and May we have a new determination to face 2009.