The Minister of Financial Services Hope Strachan’s recent posturing “…that the government is committed to the establishment of The Bahamas as a trading hub for Chinese currency, which would lead among other things to the establishment of the first Chinese bank in The Bahamas, and would — the minister contended — eliminate reliance on the U.S. dollar and the transacting of business through the United States” is intriguing to say the least.

F.A. Hayek “saw that it was crucial to bring the forces of competition to bear in currency markets, not just between countries but within them as well” in his 1976 essay, Choice in Currency.

It’s worth considering that in 1976 the Chinese Yuan (Renminbi) was not even mentioned as a remote possibility in his essay. He mentions trading in francs, pounds, dollars, D-marks or ounces of gold.

While he saw dangers of a monopoly currency he also thought that “…money is certainly too dangerous an instrument to leave to the fortuitous expediency of politicians…”

This danger should make the government wary of the Renminbi on this basis alone. Few currency, from what I can glean, are manipulated as much as the Renminbi. Even the Financial Times cautioned “renminbi bears” to “beware” earlier this year. More…

But I would suggest this is about more borrowing for the cash strapped Bahamian Government than much else at this point. Well maybe they think it’s useful policy to poke the US in the eye in this manner, but that would be cutting off their nose to spite every Bahamian.

As Mrs. Pam Burnside asks “How will this situation affect our financial sovereignty?…” More…

It seems like yesterday that the Bahamas Government was defending a debt to GDP ratio of 54%. So as this ratio approaches 80% can the conjecture that this is no more than an attempt to borrow more money from the eager Chinese be too far off the mark? More…

In these unstable economic times this seems a retrograde move for The Bahamas that could damage relations with the country’s most important trading partner.