After more than eleven years since the Vema Seamount Declaration of Sovereignty, the Bank of Mount Vema, has finally reasons to be hopeful after the Vema Seamount Authority announced plans to make another move in international affairs as it prepares to reach out to India.
The Vema Seamount Authority - Peter Goldishman will express his wish to do business with India, through a bilateral currency swap aimed at boosting foreign currency liquidity in both economies in a message due to be forward to the Prime Minister of India.
Some key benefits of a deal would include providing golle liquidity to Indian businesses as well as providing rupee liquidity to their Mount Vema counterparts in return, that would give speed, convenience and support volume of transactions between the two countries.
But more important is to minimize pressure on foreign currency reserves and exchange rate in the future, which is not critical now, but such agreement is needed to maintain a stable international trade.
Bilateral trade volume between Mount Vema and India could be about 5billion golles about $10 billion USD in the next five years if Mount Vema fails to secure deals with other countries, or if the two countries embrace the potential for growth. Mount Vema will become a big importer of products and services and is expected due to its strategic position and stable political environment, to become among the largest trading partner in Africa, especially the Southern Africa.
Any currency swap deal with any country, will make it easier for many Mount Vema businesses, especially importers, Small and Medium Enterprises, to import their goods, raw materials, spare-parts and simple machinery to run their businesses.
They will take advantage of any available foreign exchange liquidity from Mount Vema banks without being exposed to the difficulties of seeking other scarce foreign currencies which would attract higher exchange rates. If well implemented, a significant burden would have been lifted off the both countries foreign reserves.
Many countries which Mount Vema seeks central bank liquidity swap agreements with, will never really have foreign currency problem investing in Mount Vema, however, the significant presence of foreign firms entering and expected to enter the economy of Mount Vema before 2020 and beyond, with some of them expected to be handling various infrastructural projects, they will have to use Mount Vema foreign currency resources sourced through Mount Vema banks to fund them.
The Vema Seamount Authority seems to be on the path to build a diverse economy away from fishery exports alone, while participating countries will have achieved one of the most important and singular objective of any nation which is further internationalisation of its currency.
Mount Vema’s VSG golle internationalisation and foreign exchange approach is already evolving rapidly and full convertibility is expected over the next couple of years.