The Solomon Islands' multi-million US dollar logging industry is expressing concerns over reports that the central bank is acting as an agent for letters of credit (L/Cs) on behalf of the country's newest commercial bank.

The Central Bank of Solomon Islands (CBSI) is said to be acting as an agent for the recently established Pan Oceanic Bank (POB), which is finding it hard to reach correspondent banking agreements with foreign banks.

Correspondent difficulties

Because POB is experiencing difficulties establishing correspondent banking arrangements, it is unable to receive US dollar denominated L/Cs from overseas buyers for its Solomon Islands based clients.

As a result, CBSI has reportedly undertaken to deal with US dollar denominated L/Cs on POB's behalf.

Concerns expressed

But business leaders of the islands' substantial logging industry are concerned, saying that if CBSI is acting on POB's behalf, the central bank has compromised its independence.

"It has opened up CBSI to potential bribery and questionable dealings," one source is quoted in local media as saying. "It should maintain its independence as a regulator," the source concluded.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.