Abstract
This paper examines economic developments in Trinidad and Tobago during 1990–94. Economic activity in 1992–93 was severely affected by a fall in output in the oil/gas sector, a sharp drop in the average oil export price, and persisting weakness in the nonpetroleum sector. As a result, real GDP declined further by a cumulative 3½ percent in the two-year period, and unemployment rose to more than 20 percent. Real domestic expenditure fell by 3½ percent a year, with declines in both consumption and investment.
VII. Financial Liberalization
Financial liberalization has been an integral part of Trinidad and Tobago’s efforts to restructure the economy for sustained growth. The boom years of the mid-1970s had resulted in a rapid expansion of the financial system including a significant increase in the number of financial institutions; some laxity in prudential considerations and the introduction of several controls to steer financial activities in certain directions. Subsequently, the general economic downturn that started in 1981 led to low profits and solvency problems for some financial institutions.
Financial restructuring has entailed the introduction of reforms to promote a more competitive financial system and thus a more efficient allocation of financial resources. The reforms have concentrated on the elimination of distortions which may have led to financial repression with adverse effects on savings, investment and economic growth. 1/ This section outlines the forms of financial repression that existed in Trinidad and Tobago and the measures taken to liberalize the financial system during 1985-94 following a period of rapid expansion, weak supervision and associated failures of financial institutions.
1. Financial controls and repression
Soon after independence in 1962 and up to 1984, instruments of monetary controls were directed toward the maintenance of internal and external equilibria in the absence of efficient mechanisms for indirect monetary management. These controls included principally high legal reserve requirements, prudential norms, and credit ceilings. There were two types of reserve requirements. The primary reserve requirement consisted of a specified proportion of deposit liabilities that had to be held in the form of vault cash and/or noninterest- bearing deposits at the Central Bank. The secondary reserve requirement was a specified proportion of deposit liabilities that had to be held in special interest bearing deposits at the Central Bank and/or in Treasury bills. The specified proportion in each case was higher for commercial banks than for nonbank financial institutions. These differences encouraged the rapid growth of nonbank financial institutions that took place during the late 1970s-early 1980s. The Central Bank adjusted the reserve requirements as and when necessary to accommodate macroeconomic policies in terms of liquidity management and borrowing requirement of the Government.
Credit ceilings took the form of Central Bank guidelines in respect of installment credit, and consumer lending to regulated borrowers. 1/ Guidelines on installment credit set maximum repayment periods while those on consumer credit established limits on loans by individual banks. The guidelines on selected borrowers, restrictions on lending to nonresidents--as part of an indigenization process--included a prohibition of increases in credit to entities with majority foreign ownership and/or on aggregate ceiling on loans to such borrowers. Similarly, restrictions were placed from time to time on loans to public enterprises. For instance, in April 1989, a guideline was added with a view to limiting the expansion of outstanding loans and advances to state enterprises and statutory bodies without prior consultation with the Central Bank.
Trinidad and Tobago’s experience with interest rate management prior to the liberalization of the financial system can be subdivided into three periods; 1964-74, when membership in the sterling area required domestic interest rates to move closely with international sterling interest rates; 1975-85, when the exchange rate was pegged at TT$2.40 per U.S. dollar and the authorities attempted to influence levels of liquidity in the banking system by introducing a marginal reserve requirement; and 1986-88, when the Central Bank sought to limit any increase in lending rates and to minimize the size of the spread between deposit and loan rates through moral suasion. In addition, the Central Bank induced banks to grant preferential rates to selected sectors, e.g., agriculture.
Nevertheless, lending rates charged by banks rose during times of tight liquidity and did not always move in the opposite direction to reflect easy money market conditions. Deposit rates were generally lowered when money market conditions were easy but did not increase significantly when conditions became tight. It was against this background that the Central Bank Act was amended in 1978 to include the provision that the President of the Republic could on the basis of the Central Bank’s advice, fix interest rates for loans or deposits. Although interest rates were not fixed explicitly, the Central Bank used moral suasion to influence key interest rates. Interest rates on deposits were negative in real terms during 1981-90, possibly reflecting the lack of alternative short term savings instruments, the depressed state of the economy and the impact of exchange controls (Table 13 and Chart 5). The Central Bank set the rediscount rate with a view to assisting banks experiencing serious liquidity problems.
Trinidad and Tobago: Selected Indicators for the Financial Sector 1/
Trinidad and Tobago: Selected Indicators for the Financial Sector 1/
| Year | RTR | RDR | RLR | TR | DR | LE | DCR/GDP | CCG/GDP | DC31/112 |
|---|---|---|---|---|---|---|---|---|---|
| 1965 | 3.0 | -- | -- | 4.8 | -- | -- | 13.4 | 2.0 | 64.1 |
| 1966 | 0.8 | -- | -- | 4.9 | -- | -- | 17.3 | 4.5 | 72.9 |
| 1967 | 2.9 | -- | -- | 5.1 | -- | -- | 16.4 | 2.5 | 69.1 |
| 1968 | -2.2 | -- | -- | 5.8 | -- | -- | 16.9 | 3.5 | 71.0 |
| 1969 | 2.7 | -- | -- | 5.2 | -- | -- | 20.1 | 2.7 | 75.5 |
| 1970 | 2.7 | -- | -- | 5.3 | -- | -- | 24.3 | 4.2 | 81.7 |
| 1971 | 1.5 | -- | -- | 5.1 | -- | -- | 26.8 | 6.4 | 78.3 |
| 1972 | -5.1 | -- | -- | 3.7 | -- | -- | 31.9 | 7.3 | 92.0 |
| 1973 | -9.1 | -- | -- | 4.4 | -- | -- | 31.8 | 8.6 | 99.2 |
| 1974 | -13.5 | -- | -- | 5.6 | -- | -- | 8.8 | -7.3 | 34.4 |
| 1975 | -11.1 | -- | -- | 4.0 | -- | -- | -3.7 | -20.6 | -14.2 |
| 1976 | -6.1 | -- | -- | 4.0 | -- | -- | -5.6 | -26.1 | -18.1 |
| 1977 | -7.0 | -- | -- | 3.9 | -- | -- | -13.3 | -36.8 | -42.5 |
| 1978 | -6.0 | -- | -- | 3.6 | -- | -- | -10.8 | -38.3 | -31.4 |
| 1979 | -10.1 | -- | -- | 3.2 | -- | -- | -6.9 | -31.8 | -19.8 |
| 1980 | -12.3 | -- | -6.4 | 3.1 | -- | 10.0 | -9.7 | -32.2 | -33.9 |
| 1981 | -9.9 | -6.8 | -2.6 | 3.1 | 6.6 | 11.4 | -7.8 | -34.0 | -23.4 |
| 1982 | -7.7 | -4.8 | -0.1 | 3.0 | 6.3 | 11.5 | 9.3 | -18.2 | 24.0 |
| 1983 | -10.5 | -7.6 | -3.0 | 3.1 | 6.4 | 11.7 | 25.1 | -8.0 | 59.2 |
| 1984 | -8.8 | -5.8 | -0.5 | 3.4 | 6.8 | 12.8 | 32.8 | -3.2 | 73.3 |
| 1985 | -3.9 | -2.1 | 4.7 | 3.5 | 5.3 | 12.7 | 34.9 | -3.2 | 73.7 |
| 1986 | -3.4 | -1.5 | 4.0 | 4.0 | 6.0 | 12.0 | 45.4 | 6.1 | 95.4 |
| 1987 | -5.5 | -4.3 | 0.7 | 4.6 | 6.0 | 11.5 | 52.7 | 11.0 | 107.1 |
| 1988 | -2.9 | -1.6 | 4.5 | 4.6 | 6.0 | 12.6 | 54.5 | 12.3 | 110.2 |
| 1989 | -3.9 | -4.6 | 1.7 | 7.1 | 6.3 | 13.3 | 53.3 | 12.9 | 107.8 |
| 1990 | -3.2 | -4.6 | 1.7 | 7.5 | 6.0 | 12.9 | 45.9 | 11.3 | 102.2 |
| 1991 | 3.7 | 1.9 | 9.0 | 7.7 | 5.8 | 13.2 | 48.8 | 10.4 | 110.4 |
| 1992 | 2.6 | 0.5 | 8.3 | 9.3 | 7.0 | 15.3 | 50.3 | 12.4 | 121.2 |
| 1993 | -1.2 | -3.4 | 4.3 | 9.4 | 7.1 | 15.5 | 45.4 | 9.3 | 103.7 |
Trinidad and Tobago: Selected Indicators for the Financial Sector 1/
| Year | RTR | RDR | RLR | TR | DR | LE | DCR/GDP | CCG/GDP | DC31/112 |
|---|---|---|---|---|---|---|---|---|---|
| 1965 | 3.0 | -- | -- | 4.8 | -- | -- | 13.4 | 2.0 | 64.1 |
| 1966 | 0.8 | -- | -- | 4.9 | -- | -- | 17.3 | 4.5 | 72.9 |
| 1967 | 2.9 | -- | -- | 5.1 | -- | -- | 16.4 | 2.5 | 69.1 |
| 1968 | -2.2 | -- | -- | 5.8 | -- | -- | 16.9 | 3.5 | 71.0 |
| 1969 | 2.7 | -- | -- | 5.2 | -- | -- | 20.1 | 2.7 | 75.5 |
| 1970 | 2.7 | -- | -- | 5.3 | -- | -- | 24.3 | 4.2 | 81.7 |
| 1971 | 1.5 | -- | -- | 5.1 | -- | -- | 26.8 | 6.4 | 78.3 |
| 1972 | -5.1 | -- | -- | 3.7 | -- | -- | 31.9 | 7.3 | 92.0 |
| 1973 | -9.1 | -- | -- | 4.4 | -- | -- | 31.8 | 8.6 | 99.2 |
| 1974 | -13.5 | -- | -- | 5.6 | -- | -- | 8.8 | -7.3 | 34.4 |
| 1975 | -11.1 | -- | -- | 4.0 | -- | -- | -3.7 | -20.6 | -14.2 |
| 1976 | -6.1 | -- | -- | 4.0 | -- | -- | -5.6 | -26.1 | -18.1 |
| 1977 | -7.0 | -- | -- | 3.9 | -- | -- | -13.3 | -36.8 | -42.5 |
| 1978 | -6.0 | -- | -- | 3.6 | -- | -- | -10.8 | -38.3 | -31.4 |
| 1979 | -10.1 | -- | -- | 3.2 | -- | -- | -6.9 | -31.8 | -19.8 |
| 1980 | -12.3 | -- | -6.4 | 3.1 | -- | 10.0 | -9.7 | -32.2 | -33.9 |
| 1981 | -9.9 | -6.8 | -2.6 | 3.1 | 6.6 | 11.4 | -7.8 | -34.0 | -23.4 |
| 1982 | -7.7 | -4.8 | -0.1 | 3.0 | 6.3 | 11.5 | 9.3 | -18.2 | 24.0 |
| 1983 | -10.5 | -7.6 | -3.0 | 3.1 | 6.4 | 11.7 | 25.1 | -8.0 | 59.2 |
| 1984 | -8.8 | -5.8 | -0.5 | 3.4 | 6.8 | 12.8 | 32.8 | -3.2 | 73.3 |
| 1985 | -3.9 | -2.1 | 4.7 | 3.5 | 5.3 | 12.7 | 34.9 | -3.2 | 73.7 |
| 1986 | -3.4 | -1.5 | 4.0 | 4.0 | 6.0 | 12.0 | 45.4 | 6.1 | 95.4 |
| 1987 | -5.5 | -4.3 | 0.7 | 4.6 | 6.0 | 11.5 | 52.7 | 11.0 | 107.1 |
| 1988 | -2.9 | -1.6 | 4.5 | 4.6 | 6.0 | 12.6 | 54.5 | 12.3 | 110.2 |
| 1989 | -3.9 | -4.6 | 1.7 | 7.1 | 6.3 | 13.3 | 53.3 | 12.9 | 107.8 |
| 1990 | -3.2 | -4.6 | 1.7 | 7.5 | 6.0 | 12.9 | 45.9 | 11.3 | 102.2 |
| 1991 | 3.7 | 1.9 | 9.0 | 7.7 | 5.8 | 13.2 | 48.8 | 10.4 | 110.4 |
| 1992 | 2.6 | 0.5 | 8.3 | 9.3 | 7.0 | 15.3 | 50.3 | 12.4 | 121.2 |
| 1993 | -1.2 | -3.4 | 4.3 | 9.4 | 7.1 | 15.5 | 45.4 | 9.3 | 103.7 |
Trinidad and Tobago: Selected Indicators for the Financial Sector 1/ (Concluded)
Real rates of interest are calculated by the following formula; [(1+r)/(1+p)-1]*100 where r is the nominal rate of interest and p is the rate of lunation. TR is the Treasury bill rate: DR is the median deposit rate: LR is the median lending rate: the real versions of these variables are denoted by CI) at the beginning of the descriptor: RDR6 refers to the real interest rate on six months Liam deposits: DCR refers to domestic credit; CCG refers to set claims on the Central Government; CPVT refers to claims on
Trinidad and Tobago: Selected Indicators for the Financial Sector 1/ (Concluded)
| Year | CCG/M2 | CP7T/K2 | M2/GDP | GDP/M2 | OSB/M2 | SD/M2 | SD/M2 | TD/M2 | SEIG HCRAGE 2/ |
|---|---|---|---|---|---|---|---|---|---|
| 1965 | 9.6 | 54.5 | 20.9 | 4.8 | 13.7 | 34.7 | 43.0 | 13.0 | -- |
| 1966 | 19.0 | 53.9 | 23.8 | 4.2 | 13.8 | 29.6 | 42.5 | 14.9 | 1.0 |
| 1967 | 10.6 | 58.5 | 23.8 | 4.2 | 13.4 | 30.1 | 42.2 | 16.7 | -- |
| 1968 | 14.9 | 56.1 | 23.8 | 4.2 | 13.4 | 24.9 | 41.2 | 20.5 | 1.5 |
| 1969 | 10.0 | 65.5 | 26.6 | 3.8 | 12.2 | 21.1 | 41.3 | 25.1 | -0.3 |
| 1970 | 14.0 | 67.6 | 29.7 | 3.4 | 11.6 | 20.2 | 38.8 | 30.2 | 0.6 |
| 1971 | 18.6 | 59.7 | 34.2 | 2.9 | 11.3 | 18.3 | 39.0 | 31.8 | 1.6 |
| 1972 | 21.0 | 69.5 | 34.7 | 2.9 | 11.2 | 18.0 | 41.1 | 29.7 | 0.6 |
| 1973 | 26.8 | 71.2 | 32.1 | 3.1 | 9.7 | 16.0 | 34.4 | 39.8 | 0.8 |
| 1974 | -28.5 | 62.1 | 25.6 | 3.9 | 9.2 | 16.5 | 31.6 | 43.3 | 3.6 |
| 1975 | -78.6 | 64.0 | 26.2 | 3.8 | 10.0 | 19.1 | 34.0 | 37.7 | 3.3 |
| 1976 | -85.5 | 67.0 | 30.6 | 3.3 | 9.5 | 20.9 | 36.3 | 33.0 | 2.6 |
| 1977 | -117.5 | 74.7 | 31.3 | 3.2 | 9.8 | 21.2 | 34.1 | 35.2 | 0.3 |
| 1978 | -111.4 | 79.6 | 34.4 | 2.9 | 10.0 | 21.3 | 33.1 | 35.1 | 0.4 |
| 1979 | -92.0 | 72.0 | 34.5 | 2.9 | 10.8 | 20.7 | 31.1 | 38.8 | 4.8 |
| 1980 | -112.1 | 77.0 | 28.7 | 3.5 | 10.9 | 22.5 | 31.5 | 37.4 | 0.7 |
| 1981 | -101.7 | 73.9 | 33.4 | 3.0 | 9.7 | 25.9 | 29.2 | 37.0 | 1.8 |
| 1982 | -47.2 | 66.2 | 38.6 | 2.6 | 9.8 | 23.4 | 31.1 | 34.4 | 5.2 |
| 1983 | -18.9 | 71.5 | 42.4 | 2.4 | 9.6 | 19.0 | 30.5 | 38.8 | -0.8 |
| 1984 | -7.1 | 72.8 | 44.8 | 2.2 | 8.5 | 14.7 | 29.0 | 43.5 | -1.1 |
| 1985 | -4.9 | 69.2 | 47.4 | 2.1 | 8.1 | 15.1 | 29.2 | 44.1 | 0.9 |
| 1986 | 12.8 | 72.1 | 47.6 | 2.1 | 8.8 | 13.4 | 32.0 | 42.6 | -2.2 |
| 1987 | 22.4 | 72.1 | 49.2 | 2.0 | 8.3 | 12.9 | 30.3 | 44.1 | -2.6 |
| 1988 | 24.8 | 69.0 | 49.5 | 2.0 | 7.9 | 11.1 | 28.0 | 50.1 | 0.2 |
| 1989 | 26.0 | 68.0 | 49.5 | 2.0 | 7.6 | 12.7 | 29.8 | 46.8 | 1.2 |
| 1990 | 25.2 | 66.5 | 44.9 | 2.2 | 7.6 | 15.2 | 32.3 | 41.0 | 0.9 |
| 1991 | 23.5 | 76.8 | 44.3 | 2.3 | 7.5 | 18.7 | 34.1 | 36.4 | 1.6 |
| 1992 | 29.9 | 83.6 | 41.5 | 2.4 | 7.6 | 19.3 | 35.2 | 35.6 | -1.1 |
| 1993 | 21.2 | 75.2 | 43.8 | 2.3 | 6.7 | 19.5 | 34.5 | 36.0 | -0.4 |
Real rates of interest are calculated by the following formula; [(1+r)/(1+p)-1]*100 where r is the nominal rate of interest and p is the rate of lunation. TR is the Treasury bill rate: DR is the median deposit rate: LR is the median lending rate: the real versions of these variables are denoted by CI) at the beginning of the descriptor: RDR6 refers to the real interest rate on six months Liam deposits: DCR refers to domestic credit; CCG refers to set claims on the Central Government; CPVT refers to claims on
Trinidad and Tobago: Selected Indicators for the Financial Sector 1/ (Concluded)
| Year | CCG/M2 | CP7T/K2 | M2/GDP | GDP/M2 | OSB/M2 | SD/M2 | SD/M2 | TD/M2 | SEIG HCRAGE 2/ |
|---|---|---|---|---|---|---|---|---|---|
| 1965 | 9.6 | 54.5 | 20.9 | 4.8 | 13.7 | 34.7 | 43.0 | 13.0 | -- |
| 1966 | 19.0 | 53.9 | 23.8 | 4.2 | 13.8 | 29.6 | 42.5 | 14.9 | 1.0 |
| 1967 | 10.6 | 58.5 | 23.8 | 4.2 | 13.4 | 30.1 | 42.2 | 16.7 | -- |
| 1968 | 14.9 | 56.1 | 23.8 | 4.2 | 13.4 | 24.9 | 41.2 | 20.5 | 1.5 |
| 1969 | 10.0 | 65.5 | 26.6 | 3.8 | 12.2 | 21.1 | 41.3 | 25.1 | -0.3 |
| 1970 | 14.0 | 67.6 | 29.7 | 3.4 | 11.6 | 20.2 | 38.8 | 30.2 | 0.6 |
| 1971 | 18.6 | 59.7 | 34.2 | 2.9 | 11.3 | 18.3 | 39.0 | 31.8 | 1.6 |
| 1972 | 21.0 | 69.5 | 34.7 | 2.9 | 11.2 | 18.0 | 41.1 | 29.7 | 0.6 |
| 1973 | 26.8 | 71.2 | 32.1 | 3.1 | 9.7 | 16.0 | 34.4 | 39.8 | 0.8 |
| 1974 | -28.5 | 62.1 | 25.6 | 3.9 | 9.2 | 16.5 | 31.6 | 43.3 | 3.6 |
| 1975 | -78.6 | 64.0 | 26.2 | 3.8 | 10.0 | 19.1 | 34.0 | 37.7 | 3.3 |
| 1976 | -85.5 | 67.0 | 30.6 | 3.3 | 9.5 | 20.9 | 36.3 | 33.0 | 2.6 |
| 1977 | -117.5 | 74.7 | 31.3 | 3.2 | 9.8 | 21.2 | 34.1 | 35.2 | 0.3 |
| 1978 | -111.4 | 79.6 | 34.4 | 2.9 | 10.0 | 21.3 | 33.1 | 35.1 | 0.4 |
| 1979 | -92.0 | 72.0 | 34.5 | 2.9 | 10.8 | 20.7 | 31.1 | 38.8 | 4.8 |
| 1980 | -112.1 | 77.0 | 28.7 | 3.5 | 10.9 | 22.5 | 31.5 | 37.4 | 0.7 |
| 1981 | -101.7 | 73.9 | 33.4 | 3.0 | 9.7 | 25.9 | 29.2 | 37.0 | 1.8 |
| 1982 | -47.2 | 66.2 | 38.6 | 2.6 | 9.8 | 23.4 | 31.1 | 34.4 | 5.2 |
| 1983 | -18.9 | 71.5 | 42.4 | 2.4 | 9.6 | 19.0 | 30.5 | 38.8 | -0.8 |
| 1984 | -7.1 | 72.8 | 44.8 | 2.2 | 8.5 | 14.7 | 29.0 | 43.5 | -1.1 |
| 1985 | -4.9 | 69.2 | 47.4 | 2.1 | 8.1 | 15.1 | 29.2 | 44.1 | 0.9 |
| 1986 | 12.8 | 72.1 | 47.6 | 2.1 | 8.8 | 13.4 | 32.0 | 42.6 | -2.2 |
| 1987 | 22.4 | 72.1 | 49.2 | 2.0 | 8.3 | 12.9 | 30.3 | 44.1 | -2.6 |
| 1988 | 24.8 | 69.0 | 49.5 | 2.0 | 7.9 | 11.1 | 28.0 | 50.1 | 0.2 |
| 1989 | 26.0 | 68.0 | 49.5 | 2.0 | 7.6 | 12.7 | 29.8 | 46.8 | 1.2 |
| 1990 | 25.2 | 66.5 | 44.9 | 2.2 | 7.6 | 15.2 | 32.3 | 41.0 | 0.9 |
| 1991 | 23.5 | 76.8 | 44.3 | 2.3 | 7.5 | 18.7 | 34.1 | 36.4 | 1.6 |
| 1992 | 29.9 | 83.6 | 41.5 | 2.4 | 7.6 | 19.3 | 35.2 | 35.6 | -1.1 |
| 1993 | 21.2 | 75.2 | 43.8 | 2.3 | 6.7 | 19.5 | 34.5 | 36.0 | -0.4 |
Real rates of interest are calculated by the following formula; [(1+r)/(1+p)-1]*100 where r is the nominal rate of interest and p is the rate of lunation. TR is the Treasury bill rate: DR is the median deposit rate: LR is the median lending rate: the real versions of these variables are denoted by CI) at the beginning of the descriptor: RDR6 refers to the real interest rate on six months Liam deposits: DCR refers to domestic credit; CCG refers to set claims on the Central Government; CPVT refers to claims on
TRINIDAD AND TOBAGO FINANCIAL INDICATORS
Citation: IMF Staff Country Reports 1995, 016; 10.5089/9781451837520.002.A007
Source: IMF, International Financial Statistics.TRINIDAD AND TOBAGO FINANCIAL INDICATORS
Citation: IMF Staff Country Reports 1995, 016; 10.5089/9781451837520.002.A007
Source: IMF, International Financial Statistics.TRINIDAD AND TOBAGO FINANCIAL INDICATORS
Citation: IMF Staff Country Reports 1995, 016; 10.5089/9781451837520.002.A007
Source: IMF, International Financial Statistics.Other restrictions on nonbank financial institutions included the requirement in 1967 of foreign banks and insurance companies to become locally incorporated and sell 25 percent of their shares to nationals, the exhortation of foreign banks to divest at least 51 percent of their issued capital into local hands, and the constraint on these banks on opening new branches. These restrictions were part of a deliberate policy to indigenize financial institutions. 1/
Allocative guidelines sought to direct financial resources toward selected projects and sectors reflecting the underdevelopment of capital markets and the lack of other sources of long-term finance. Policies included the subsidization of investments that the authorities considered may not have been undertaken at high interest rates but that had high social returns. The subsidy was controlled through a rediscount facility at the Central Bank for qualifying commercial bank loans. The Central Bank also established guidelines for the allocation of bank credit by economic activity. The Government created special institutions to extend subsidized credit to targeted activities; these included the Agricultural Development Bank, the Development Finance Company, the Unit Trust Corporation, and the Mortgage Finance Company.
Structural controls governed the entry of new institutions in the market, established the range of activities that different institutions could pursue, and determined the size of individual institutions. In 1965 the Government established a Capital Issues Committee to oversee activities in the primary market while the Central Bank established an association of share dealers (the Call Exchange) to encourage activities in the secondary market. In this regard, the Financial Institutions Act required banks to give preference to short-term instruments originating in Trinidad and Tobago when placing liquid assets, and this constituted a form of asset prescription.
Some of the elements described above constituted distortions in the financial system. Interest rates were significantly negative in real terms throughout the period 1965-88, with possible constraining effects on economic growth (Chart 6). Low real returns on deposits may have contributed to low savings that resulted in an adverse selection of projects as those with low profitability and low risk were encouraged while those with higher risks but more profitable were rationed or discouraged.
Trinidad & Tobago Selected Interest Rates, 1965–93
Citation: IMF Staff Country Reports 1995, 016; 10.5089/9781451837520.002.A007
Source: IMF, International Financial Statistics.Trinidad & Tobago Selected Interest Rates, 1965–93
Citation: IMF Staff Country Reports 1995, 016; 10.5089/9781451837520.002.A007
Source: IMF, International Financial Statistics.Trinidad & Tobago Selected Interest Rates, 1965–93
Citation: IMF Staff Country Reports 1995, 016; 10.5089/9781451837520.002.A007
Source: IMF, International Financial Statistics.The legal reserve requirements became higher than what may be considered necessary for prudential considerations; about 10 percentage points higher than in countries at a similar stage of development. The distortions created by the financial controls--particularly the implied discrimination against banks--led to the number of nonbank financial institutions being increased rapidly either as subsidiaries of banks (to circumvent some of the controls) or as free-standing institutions (to benefit from the rent created by the distortions). In response to the incentives referred to above, the number of nonbank financial institutions increased from 7 in 1966 to about 32 by 1988 (Table 14). 2/ However, a significant number of these nonbank institutions were weak with substantial amount of nonperforming loans; by 1983, 5 finance houses experienced runs on deposits that led to their subsequent closure. Finally, the set of regulations created a captive market for financing public sector activities and supporting nonbank financial institutions experiencing solvency difficulties.
Trinidad and Tobago: Number of Financial Institutions
Includes Trinidad and Tobago Mortgage Finance Company.
Refers to the number of registered societies, a large number is not active.
Trinidad and Tobago: Number of Financial Institutions
| Institution | 1966 | 1975 | 1978 | 1980 | 1985 | 1988 | |
|---|---|---|---|---|---|---|---|
| Central Bank | 1 | 1 | 1 | 1 | 1 | 1 | |
| Commercial banks | 7 | 9 | 9 | 9 | 8 | 8 | |
| Branches | 54 | 91 | 99 | 105 | 117 | 121 | |
| Finance companies and merchant banks | 2 | 7 | 12 | 12 | 14 | 10 | |
| Trust and mortgage finance companies | 3 | 5 | 7 | 7 | 8 | 8 | |
| Development banks 1/ | 2 | 3 | 3 | 3 | 3 | 3 | |
| Credit unions 2/ | 312 | 284 | 308 | 420 | 381 | 400 | |
| Insurance companies | -- | 57 | 62 | 60 | 57 | 56 | |
| Thrift institutions | -- | 4 | 4 | 4 | 4 | 4 | |
| National Insurance Board | -- | 1 | 1 | 1 | 1 | 1 | |
| Stock exchange | -- | -- | -- | 1 | 1 | 1 | |
| Unit Trust Corporation | -- | -- | -- | -- | 1 | 1 | |
| Export credit insurance | 1 | 1 | 1 | 1 | 1 | 1 | |
| Reinsurance company | -- | -- | 1 | 1 | 1 | 1 | |
| Deposit Insurance Corporation | -- | -- | -- | -- | -- | 1 | |
| Home mortgage bank | -- | -- | -- | -- | -- | 1 | |
| Total | 328 | 372 | 409 | 520 | 481 | 497 | |
Includes Trinidad and Tobago Mortgage Finance Company.
Refers to the number of registered societies, a large number is not active.
Trinidad and Tobago: Number of Financial Institutions
| Institution | 1966 | 1975 | 1978 | 1980 | 1985 | 1988 | |
|---|---|---|---|---|---|---|---|
| Central Bank | 1 | 1 | 1 | 1 | 1 | 1 | |
| Commercial banks | 7 | 9 | 9 | 9 | 8 | 8 | |
| Branches | 54 | 91 | 99 | 105 | 117 | 121 | |
| Finance companies and merchant banks | 2 | 7 | 12 | 12 | 14 | 10 | |
| Trust and mortgage finance companies | 3 | 5 | 7 | 7 | 8 | 8 | |
| Development banks 1/ | 2 | 3 | 3 | 3 | 3 | 3 | |
| Credit unions 2/ | 312 | 284 | 308 | 420 | 381 | 400 | |
| Insurance companies | -- | 57 | 62 | 60 | 57 | 56 | |
| Thrift institutions | -- | 4 | 4 | 4 | 4 | 4 | |
| National Insurance Board | -- | 1 | 1 | 1 | 1 | 1 | |
| Stock exchange | -- | -- | -- | 1 | 1 | 1 | |
| Unit Trust Corporation | -- | -- | -- | -- | 1 | 1 | |
| Export credit insurance | 1 | 1 | 1 | 1 | 1 | 1 | |
| Reinsurance company | -- | -- | 1 | 1 | 1 | 1 | |
| Deposit Insurance Corporation | -- | -- | -- | -- | -- | 1 | |
| Home mortgage bank | -- | -- | -- | -- | -- | 1 | |
| Total | 328 | 372 | 409 | 520 | 481 | 497 | |
Includes Trinidad and Tobago Mortgage Finance Company.
Refers to the number of registered societies, a large number is not active.
Following the failure of some financial institutions, the Deposit Insurance Corporation (DIC) was established in 1986 with a view to restoring confidence in the banking system. The DIC was primarily funded by contributions from the Central Bank and it paid out TT$176 million in 1987 and TT$20 million in 1988 in deposit insurance claims on finance houses that were closed in 1986. After these payments, commercial banks were required to increase their provisions for losses and their contributions to the DIC in late 1988.
In September 1993, three government owned financial institutions; the Cooperative Bank, the Workers’ Bank and the National Commercial Bank were merged to form the First Citizen’s Bank in order to strengthen their operations and prepare the new bank for eventual privatization.
In an effort to foster confidence in the financial sector, strengthen supervision and forestall liquidity problems, the Financial Institutions Act and the Central Bank Act were amended in 1993 and 1994, respectively. The amendments to the Central Bank Act contain provisions for capital adequacy ratios, and procedures for monitoring loan portfolios.
2. Liberalization measures
It was in the above setting that the authorities decided in 1989 to undertake reforms to strengthen the financial system and to rely on market-determined interest rates, indirect instruments for monetary management and foster savings and investment for higher economic growth. 1/ The liberalization of the financial system also was expected to increase the size of the financial system and improve competition among the institutions and thereby narrow the spread between deposit and lending interest rates. The liberalization was to benefit from and enhance the role of the Stock Exchange which was established in 1981 to replace the Capital Issues Committee and the Call Exchange. The authorities recognized that a stable macroeconomic environment and a strong supervisory and regulatory framework for financial institutions were necessary for a successful financial liberalization. To this end, they had adopted in 1988 the economic stabilization program referred to in Section II.
The first area addressed was credit ceilings and controls. In October 1988, the guidelines on credit to regulated borrowers were relaxed and replaced by an overall ceiling of 10 percent on individual bank lending to foreign-owned enterprises. In addition, controls on the operations of foreign banks--including those limiting their branches--were removed in 1990. All selective credit controls and guidelines were removed during the first quarter of 1994.
The secondary reserve requirement was raised from 5 percent to 11 percent at the end of 1987 while the primary reserve requirement was reduced from 15 percent to 9 percent. 1/ This created a captive market for treasury bills, as commercial banks had to increase their holdings of treasury bills.
This policy was reversed in 1989 as the secondary reserve requirement was reduced from 11 percent to 9 percent in January 1989, to 7 percent in May and 5 percent in July in an effort to widen the market for treasury bills and at the same time help reduce the spread between commercial bank’s deposit and lending rates. However, to prevent a possible surge in credit, the primary reserve requirement was increased from 9 percent to 12 percent in July 1989. As the market for treasury bills developed, the secondary reserve requirement was eliminated in January 1991.
With a view to moving the banking system towards market determined interest rates and to discourage commercial bank borrowing from the Central Bank, the rediscount rate was raised to 9.5 percent in 1988 and the Central Bank adopted a policy of maintaining the rediscount rate at a minimum of 2 percentage points above the weighted average interest rate on commercial bank time deposits. In addition, a timetable was set for commercial banks to reduce their outstanding advances from the Central Bank. Legislation allowing an increase in the amount of treasury bills and other government securities from TT$5 billion to TT$7 billion is expected to be enacted in the first quarter of 1995.
3. Results of liberalization
A principal result of financial liberalization, together with the liberalization of the trade and exchange systems has been to provide the basis for the establishment of mechanisms for indirect instruments of monetary management. Also, monthly interest rates on savings deposits, special deposits and term deposits have become significantly positive in real terms (Table 15). Section VIII below assesses whether there has been an outward shift in the demand for money function as market-determined interest rates begin to reflect more fully economic conditions, the riskiness of assets, and the emergence of new financial instruments.
Trinidad and Tobago: Monthly Real Interest Rates
Trinidad and Tobago: Monthly Real Interest Rates
| Jan. | Feb. | March | April | May | Jun. | July | Aug. | Sept. | Oct. | Nov. | Dec. | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1987 | |||||||||||||
| SR | 2.5 | 0.7 | 1.5 | 2.0 | 2.2 | 1.6 | 1.4 | 1.7 | 3.4 | 3.1 | 2.6 | 2.2 | |
| SPDR | 5.5 | 3.6 | 4.5 | 5.0 | 5.2 | 4.6 | 4.3 | 4.7 | 6.7 | 6.4 | 5.9 | 5.6 | |
| THREE | 6.1 | 4.2 | 5.1 | 6.0 | 6.2 | 5.5 | 5.3 | 5.3 | 7.1 | 6.8 | 5.9 | 5.4 | |
| SIX | 6.7 | 4.6 | 5.4 | 6.2 | 6.4 | 5.8 | 5.6 | 5.9 | 7.7 | 7.4 | 6.8 | 6.3 | |
| 1988 | |||||||||||||
| SR | 1.8 | 3.3 | 2.9 | 2.8 | 3.1 | 1.9 | 2.4 | 2.4 | 1.3 | 1.1 | 1.7 | 2.6 | |
| SSR | 4.5 | 6.1 | 5.6 | 5.6 | 5.9 | 4.6 | 5.2 | 5.1 | 4.0 | 3.7 | 4.4 | 5.3 | |
| THREE | 4.5 | 6.5 | 6.3 | 6.3 | 6.2 | 4.8 | 5.4 | 5.3 | 4.3 | 4.7 | 4.9 | 6.6 | |
| SIX | 5.7 | 7.3 | 7.0 | 7.0 | 7.2 | 6.0 | 6.5 | 6.4 | 5.3 | 5.2 | 6.2 | 7.2 | |
| 1989 | |||||||||||||
| SR | 1.7 | 2.8 | 3.0 | 3.1 | 2.7 | 2.4 | 2.2 | 2.6 | 2.4 | 1.7 | 2.3 | 1.3 | |
| SSR | 4.4 | 5.5 | 5.8 | 5.9 | 5.5 | 5.1 | 4.9 | 5.4 | 5.1 | 4.9 | 5.5 | 4.5 | |
| THREE | 5.7 | 7.2 | 7.4 | 7.2 | 6.0 | 5.6 | 5.3 | 5.7 | 5.5 | 5.2 | 5.9 | 4.9 | |
| SIX | 6.3 | 7.4 | 7.6 | 7.5 | 6.6 | 5.4 | 5.7 | 6.0 | 5.8 | 5.5 | 6.1 | 5.1 | |
| 1990 | |||||||||||||
| SR | -0.3 | 2.6 | 2.5 | 1.4 | 2.5 | 1.8 | 2.3 | 2.3 | 2.0 | 1.8 | 2.3 | 2.6 | |
| SSR | 2.8 | 5.9 | 5.8 | 4.6 | 5.7 | 5.0 | 5.5 | 5.5 | 5.3 | 5.0 | 5.5 | 5.8 | |
| THREE | 2.7 | 5.8 | 5.5 | 4.2 | 5.5 | 5.0 | 5.6 | 5.5 | 5.3 | 5.0 | 5.8 | 6.1 | |
| SIX | 3.4 | 6.5 | 6.1 | 5.0 | 6.1 | 5.6 | 6.0 | 6.0 | 5.7 | 5.6 | 6.2 | 6.5 | |
| 1991 | |||||||||||||
| SR | 2.1 | 2.7 | 2.4 | 2.6 | 1.8 | 2.5 | 2.8 | 2.5 | 2.6 | 2.2 | 1.8 | 1.7 | |
| SSR | 5.6 | 6.2 | 5.9 | 6.1 | 5.3 | 6.0 | 6.3 | 6.0 | 6.1 | 5.7 | 5.2 | 5.1 | |
| THREE | 5.7 | 6.3 | 5.4 | 5.7 | 4.8 | 5.6 | 6.0 | 5.9 | 6.0 | 6.0 | 6.2 | 6.8 | |
| SIX | 6.2 | 6.6 | 5.9 | 6.1 | 5.3 | 6.0 | 6.2 | 6.1 | 6.3 | 6.3 | 6.4 | 6.9 | |
| 1992 | |||||||||||||
| SR | 1.6 | 1.7 | 2.8 | 1.2 | 2.0 | 1.0 | 2.2 | 2.4 | 2.8 | 2.1 | 1.4 | 1.5 | |
| SSR | 5.2 | 5.3 | 6.4 | 4.9 | 5.8 | 4.7 | 5.9 | 6.1 | 6.6 | 5.9 | 5.2 | 5.0 | |
| THREE | 6.5 | 6.7 | 7.9 | 6.4 | 7.4 | 6.0 | 7.3 | 7.5 | 7.9 | 7.4 | 6.7 | 6.5 | |
| SIX | 7.1 | 7.2 | 8.3 | 6.9 | 7.7 | 6.8 | 7.9 | 8.0 | 8.5 | 7.8 | 7.0 | 6.8 | |
| 1993 | |||||||||||||
| SR | 2.8 | 2.1 | 2.9 | 0.5 | 0.2 | -- | 2.2 | 2.0 | 2.2 | 0.7 | 2.4 | 2.1 | |
| SSR | 6.3 | 5.5 | 6.4 | 3.9 | 3.6 | 3.4 | 5.7 | 5.5 | 5.6 | 4.2 | 5.9 | 5.6 | |
| THREE | 7.8 | 7.0 | 7.8 | 5.4 | 5.2 | 4.9 | 7.2 | 6.9 | 6.9 | 5.7 | 7.4 | 6.5 | |
| SIX | 8.2 | 7.4 | 8.2 | 5.8 | 5.8 | 5.5 | 7.9 | 7.4 | 6.9 | 5.8 | 7.5 | 7.6 | |
Trinidad and Tobago: Monthly Real Interest Rates
| Jan. | Feb. | March | April | May | Jun. | July | Aug. | Sept. | Oct. | Nov. | Dec. | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1987 | |||||||||||||
| SR | 2.5 | 0.7 | 1.5 | 2.0 | 2.2 | 1.6 | 1.4 | 1.7 | 3.4 | 3.1 | 2.6 | 2.2 | |
| SPDR | 5.5 | 3.6 | 4.5 | 5.0 | 5.2 | 4.6 | 4.3 | 4.7 | 6.7 | 6.4 | 5.9 | 5.6 | |
| THREE | 6.1 | 4.2 | 5.1 | 6.0 | 6.2 | 5.5 | 5.3 | 5.3 | 7.1 | 6.8 | 5.9 | 5.4 | |
| SIX | 6.7 | 4.6 | 5.4 | 6.2 | 6.4 | 5.8 | 5.6 | 5.9 | 7.7 | 7.4 | 6.8 | 6.3 | |
| 1988 | |||||||||||||
| SR | 1.8 | 3.3 | 2.9 | 2.8 | 3.1 | 1.9 | 2.4 | 2.4 | 1.3 | 1.1 | 1.7 | 2.6 | |
| SSR | 4.5 | 6.1 | 5.6 | 5.6 | 5.9 | 4.6 | 5.2 | 5.1 | 4.0 | 3.7 | 4.4 | 5.3 | |
| THREE | 4.5 | 6.5 | 6.3 | 6.3 | 6.2 | 4.8 | 5.4 | 5.3 | 4.3 | 4.7 | 4.9 | 6.6 | |
| SIX | 5.7 | 7.3 | 7.0 | 7.0 | 7.2 | 6.0 | 6.5 | 6.4 | 5.3 | 5.2 | 6.2 | 7.2 | |
| 1989 | |||||||||||||
| SR | 1.7 | 2.8 | 3.0 | 3.1 | 2.7 | 2.4 | 2.2 | 2.6 | 2.4 | 1.7 | 2.3 | 1.3 | |
| SSR | 4.4 | 5.5 | 5.8 | 5.9 | 5.5 | 5.1 | 4.9 | 5.4 | 5.1 | 4.9 | 5.5 | 4.5 | |
| THREE | 5.7 | 7.2 | 7.4 | 7.2 | 6.0 | 5.6 | 5.3 | 5.7 | 5.5 | 5.2 | 5.9 | 4.9 | |
| SIX | 6.3 | 7.4 | 7.6 | 7.5 | 6.6 | 5.4 | 5.7 | 6.0 | 5.8 | 5.5 | 6.1 | 5.1 | |
| 1990 | |||||||||||||
| SR | -0.3 | 2.6 | 2.5 | 1.4 | 2.5 | 1.8 | 2.3 | 2.3 | 2.0 | 1.8 | 2.3 | 2.6 | |
| SSR | 2.8 | 5.9 | 5.8 | 4.6 | 5.7 | 5.0 | 5.5 | 5.5 | 5.3 | 5.0 | 5.5 | 5.8 | |
| THREE | 2.7 | 5.8 | 5.5 | 4.2 | 5.5 | 5.0 | 5.6 | 5.5 | 5.3 | 5.0 | 5.8 | 6.1 | |
| SIX | 3.4 | 6.5 | 6.1 | 5.0 | 6.1 | 5.6 | 6.0 | 6.0 | 5.7 | 5.6 | 6.2 | 6.5 | |
| 1991 | |||||||||||||
| SR | 2.1 | 2.7 | 2.4 | 2.6 | 1.8 | 2.5 | 2.8 | 2.5 | 2.6 | 2.2 | 1.8 | 1.7 | |
| SSR | 5.6 | 6.2 | 5.9 | 6.1 | 5.3 | 6.0 | 6.3 | 6.0 | 6.1 | 5.7 | 5.2 | 5.1 | |
| THREE | 5.7 | 6.3 | 5.4 | 5.7 | 4.8 | 5.6 | 6.0 | 5.9 | 6.0 | 6.0 | 6.2 | 6.8 | |
| SIX | 6.2 | 6.6 | 5.9 | 6.1 | 5.3 | 6.0 | 6.2 | 6.1 | 6.3 | 6.3 | 6.4 | 6.9 | |
| 1992 | |||||||||||||
| SR | 1.6 | 1.7 | 2.8 | 1.2 | 2.0 | 1.0 | 2.2 | 2.4 | 2.8 | 2.1 | 1.4 | 1.5 | |
| SSR | 5.2 | 5.3 | 6.4 | 4.9 | 5.8 | 4.7 | 5.9 | 6.1 | 6.6 | 5.9 | 5.2 | 5.0 | |
| THREE | 6.5 | 6.7 | 7.9 | 6.4 | 7.4 | 6.0 | 7.3 | 7.5 | 7.9 | 7.4 | 6.7 | 6.5 | |
| SIX | 7.1 | 7.2 | 8.3 | 6.9 | 7.7 | 6.8 | 7.9 | 8.0 | 8.5 | 7.8 | 7.0 | 6.8 | |
| 1993 | |||||||||||||
| SR | 2.8 | 2.1 | 2.9 | 0.5 | 0.2 | -- | 2.2 | 2.0 | 2.2 | 0.7 | 2.4 | 2.1 | |
| SSR | 6.3 | 5.5 | 6.4 | 3.9 | 3.6 | 3.4 | 5.7 | 5.5 | 5.6 | 4.2 | 5.9 | 5.6 | |
| THREE | 7.8 | 7.0 | 7.8 | 5.4 | 5.2 | 4.9 | 7.2 | 6.9 | 6.9 | 5.7 | 7.4 | 6.5 | |
| SIX | 8.2 | 7.4 | 8.2 | 5.8 | 5.8 | 5.5 | 7.9 | 7.4 | 6.9 | 5.8 | 7.5 | 7.6 | |
APPENDIX The Structure of the Financial System
The financial system comprises the Central Bank of Trinidad and Tobago, six deposit money banks (commercial banks), other banking institutions and nonbank financial institutions. Other banking institutions comprise twelve finance companies and merchant banks, eight trust companies and mortgage finance companies, four thrift institutions, two development banks, four hundred credit unions and the Post Office savings Bank. Nonbank financial institutions comprise sixty insurance companies, a unit trust, the Deposit Insurance Corporation (DIC) about two hundred pension funds and the Stock Exchange. The Central Bank has supervisory functions over the operations of commercial banks, finance companies and merchant banks; they are required to submit monthly reports to the Central Bank. The rest of the financial institutions fall outside the jurisdiction of the Central Bank and only report to the Central Bank on a voluntary basis.
1. Monetary Authority
The Central Bank of Trinidad and Tobago is the monetary authority and its role is to manage the country’s official international reserves, to issue currency and coins, to be the banker and fiscal agent for government, and to hold the statutory reserves of the banking institutions. It is also responsible for the transactions with the Fund.
2. Commercial banks
The number of commercial banks fell from eight to six on September 13, 1993, when the Trinidad Co-operative Bank, the Workers’ Bank and the National Commercial Bank in September 1993, were merged to form the First Citizens’ Bank (FCB). Commercial banks incur liabilities in the form of transferable deposits. Banks are required to report to the Central Bank of Trinidad and Tobago through monthly statements of condition. The statements have to be submitted within 20 working days of the period which is being reported on.
3. Other banking institutions
The Financial Institutions (Nonbanking) Act is the statute that governs the operations of other banking institutions. These entities include merchant banks, finance companies, credit unions, trust and mortgage companies. They incur liabilities in the form of nontransferable deposits such as fixed, time, and savings deposits and securities. Finance companies and merchant banks are required to report to the Central Bank on a monthly basis while thrift institutions are not required statutorily to report to the Central Bank but voluntarily do so on a quarterly basis.
4. Nonbank financial institutions
Nonbank financial institutions comprise insurance companies and various types of pension and mutual funds. Together these institutions are the largest group in terms of domestic savings mobilization, after commercial banks. These institutions fall under the supervision of the Ministry of Finance and are not regulated by the Central Bank.
5. Licensing
The licensing requirement is that a bank has capital of at least TT$500,000 of which a minimum of TT$300,000 must be subscribed. At least TT$200,000 or 30 percent of the authorized capital, whichever is greater, must be paid in cash. Apart from the requirement that they be registered under the provisions of the companies Ordinance and that they supply the Central Bank with certified copies of their memoranda, foreign banks face the same conditions as local banks.
6. Prudential requirements
At the end of each financial year, each bank is required to transfer at least 10 percent of net profits into a Reserve Fund until this fund reaches the level of the paid up capital. Deposit liabilities of banks should not exceed 20 times the paid up capital plus the Reserve Fund. Licensed banks are required to maintain a Reserve Account with the Central Bank, in which they are required to deposit a certain ratio of total prescribed liabilities as determined by the Central Bank from time to time. At present, the reserve requirement ratio stands at 20 percent.
The Financial Institutions Act requires banks to give preference to short-dated instruments originating in Trinidad and Tobago when placing their liquid assets. The Act provides for the appointment of an Inspector and the granting of the necessary powers for the carrying out of his functions. Each licensed bank is required to submit regularly statements of its assets and liabilities, loans and advances, earnings and expenses and other financial data as the Central bank may require.
See Vittas (ed.) (1992) Financial Regulation, Changing the Rules of the Game, EDI, World Bank, for a description of the types of financial sector controls that may generate distortions. The types of controls are not mutually exclusive since the actual measures deployed may service more than one type of control.
Regulated borrowers included public enterprises, statutory bodies and foreign entities.
Before independence in 1962 the banking system was dominated by branches of British and Canadian banks.
The number of credit unions, thrift institutions and insurance companies rose to 484 by 1980.
The justification for financial liberalization is rooted in the classical view of savings determining the level of investment; McKinnon (1973) and Shaw (1973). Extensive work has been done to extend this basic framework in the context of both open and closed economy models; Kapur (1976), Mathieson (1980) and Galbis (1977).
Treasury bill holdings were included in secondary reserves.
