"A certain amount of caution is needed regarding this issue, especially now that we have the statement from the Bank of Mozambique announcing that it has suspended Standard Bank from foreign exchange activity of converting currencies for up to one year," warned Egna Sidumo, a researcher and university professor.
Quoted by the VOA portal, Egna Sidumo said that this suspension will cause a probable increase in the preference for liquidity of families and companies, stressing that when most of the banks are subject to a run on deposits, simultaneously there may be a financial crisis, causing the financial system to stop working, causing an economic recession.
For that economist, "the impacts of this suspension are devastating; it can lead to low levels of production and investment, increased unemployment, and reduced government spending."
Correct decision
The deputy executive director of the Confederation of Economic Associations (CTA) of Mozambique, Eduardo Sengo, says that the impact of this suspension is already being felt in the economy, "because Standard Bank is the leader in the foreign exchange market.
"Most foreign investors use Standard Bank, and with this bank being the leader in the foreign exchange market, no doubt this suspension will also affect foreign investment in the country.
Economists stress, however, that despite these situations, the Bank of Mozambique's decision is correct.
The Bank of Mozambique statement indicates that the offenses committed by Standard Bank include, fraudulent manipulation of the exchange rate; installation and implementation of an illegal payment network based outside the country and carrying out irregular operations of financial derivatives to hedge the risk associated with currency fluctuation, among others.
Standard Bank says it is working with the Bank of Mozambique to clarify all allegations about its suspension from the foreign exchange market and safeguard the interests of clients.