Interbank Market News Scan: Federal Reserve releases minutes; New York Fed unwinds corporate bonds.

Interbank. At the end of 2021, most term loans, lines of credit or other debt instruments with variable interest provisions tied to the London Interbank Offered Rate (LIBOR) will need to switch to an alternative benchmark. https://www.telegraphherald.com/magazine-websites/biztimes/finance/article_eb0ab61c-9dfb-5dab-a4d8-30d4713f1c39.html

Interbank. China’s government bonds rallied, sending the benchmark 10-year yield to the lowest level since August, after the government indicated that the central bank could loosen its policy to support the economy. https://www.bloomberg.com/news/articles/2021-07-08/china-s-traders-race-to-buy-bonds-on-policy-easing-signals?sref=oriheOus

Interbank.  Here’s what went wrong with LIBOR. https://www.bloomberg.com/news/videos/2021-06-29/here-s-what-went-wrong-with-libor-video?sref=oriheOus

Interbank. Only half of loan investors believe their instruments have robust fallback language designed to ensure a smooth transition from the London interbank offered rate, according to a recent survey from Barclays Plc. https://www.bloomberg.com/news/articles/2021-06-25/libor-fears-persist-for-loan-market-with-six-months-to-deadline?sref=oriheOus

Interbank. A key gauge of funding conditions in Europe suggests money markets are pricing in an eventual end to the region’s unprecedented liquidity glut. https://www.bloomberg.com/news/articles/2021-07-02/europe-s-money-markets-prepare-for-world-without-unlimited-cash?sref=oriheOus

Interbank. Look for dollar strength into 2022. https://www.bloomberg.com/news/videos/2021-07-08/look-for-dollar-strength-into-2022-ubs-global-wm-s-schnider-video?sref=oriheOus

Board of Governors of the Federal Reserve.  Minutes of the Federal Reserve Open Market Committee. https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20210616.pdf

Federal Reserve Bank of New York. The Federal Reserve Bank of New York today announced that the Secondary Market Corporate Credit Facility (SMCCF) will begin gradual sales of its corporate bond holdings on July 12, 2021. https://www.newyorkfed.org/newsevents/news/markets/2021/20210708

8 July 2021

Interbank Market News Scan: Eastern Caribbean, foreign exchange …

2 July 2021

Foreign exchange rates of interest

Where base currency is XCDRates as of 9:30 am AST 2 July 2021Where term currency is XCDRates as of 9:30 am AST 2 July 2021
XCD/EUR0.3125EUR/XCD3.2000
XCD/GBP0.2686GBP/XCD3.7231
XCD/USD0.3704USD/XCD2.7000
XCD/CAD0.4596CAD/XCD2.1754
XCD/NGN152.1010NGN/XCD0.0066
XCD/CNY2.3938CNY/XCD0.4174
XCD/PLN1.4111PLN/XCD0.7081
XCD/PEN1.4229PEN/XCD0.6963
Source: OANDA

Eastern Caribbean Central Bank-interest rates

ECCB Fixed Deposit Rate-1 month0%
ECCB Fixed Deposit Rate-2 months0%
ECCB Fixed Deposit Rate-3 months0%
*ECCU Minimum Savings Deposit Rate2%
ECCB Discount Rate2%
Source: Eastern Caribbean Central Bank

Links to follow …

Eastern Caribbean Central Bank. The Eastern Caribbean Central Bank (ECCB) recorded a net profit of $25.2 million for the year ended 31 March 2021, a 60.1 per cent decrease from the profit reported in the prior year. https://www.eccb-centralbank.org/news/view/eccb-records-profit-for-financial-year-2020-2021

European Central Bank. The European Central Bank (ECB) and the European Systemic Risk Board (ESRB) today published a joint report that takes a closer look at how a broadened set of climate change drivers affects millions of global firms and thousands of financial firms in the European Union (EU). https://www.ecb.europa.eu/press/pr/date/2021/html/ecb.pr210701~8fe34bbe8e.en.html

Interbank. The yuan’s share of the world’s central banks’ reserves is at 2.45%. https://illinoisnewstoday.com/chinese-yuan-share-of-world-foreign-exchange-reserves-hits-new-highs/279603/

Interbank. The Central Bank of The Bahamas says the restrictions placed on foreign exchange outflows at the onset of the economic crisis caused by the COVID-19 pandemic will end this week. https://www.nycaribnews.com/articles/foreign-exchange-restrictions-eased-in-bahamas/

Interbank Market News Scan: Banks as currency agents, foreign exchange, Federal Reserve

The Publisher’s Note: Banks as currency agents …

Banks should think of themselves as the private sector currency agents of the State.  The currency encapsulates the economic, commercial, and social value of a political economy.  A State-issued currency ties the State’s citizens to a particular value system while providing a mechanism that accounts for a citizen’s wealth and serves the citizen as a medium of exchange for goods and services, including the payment of taxes to the State.

Banks help distribute State-issued currency primarily through the creation of credit.  Banks are a “port of call” for currency; receiving deposits from its customers, capital from its investors, and placing State-issued Treasurys, underwritten by the central bank, into its investment portfolio.  Banks issue loans to their customers creating money in the process.  This money can be deposited at other banks or used by consumers or businesses for purchases.  The fees for financial services provided to consumers and the interest earned from lending to end users and producers provide the banks with income that, along with the income generated by businesses financed by banks, can be taxed by the State.

The fallout from the 2007-2008 financial meltdown has created a narrative that banks are entities separate from the State; private sector “bad boys” whose reckless behavior from creating financial instruments doomed to perform poorly caused people to lose jobs and credit to freeze.  The narrative had citizens questioning why these misbehaving banks received bailouts from the U.S. government while ordinary citizens had to bear the brunt of the rippling effects throughout the economy. 

The answer is simple.  Selling debt instruments and earning fees for placing these instruments into the hands of investors part of the implicit agreement between the State and the banks as currency agents.  Even as elected officials such as Senator Elizabeth Warren, Democrat of Massachusetts and Senator Bernie Sanders, Independent of Vermont, argue for increased regulation of America’s larger banks, the truth of the matter is that dismantling the mechanisms of banking would be too costly to the State’s currency distribution system.  The State would have to re-write its laws to support an alternative system and for all the noise against the current system, seems to be in no rush to replace it.    

Links to follow …

Interbank. Orum, which aims to speed up the amount of time it takes to transfer money between banks, announced today it has raised $56 million in a Series B round of funding. https://techcrunch.com/2021/06/29/orum-raises-56m/

Interbank. The overnight Shanghai Interbank Offered Rate (Shibor), which measures the borrowing cost of China’s interbank market, increased 38.2 basis points to 2.177 percent Wednesday. http://www.china.org.cn/china/Off_the_Wire/2021-06/30/content_77597450.htm

Foreign exchange. The Central Bank of The Bahamas says the restrictions placed on foreign exchange outflows at the onset of the economic crisis caused by the COVID-19 pandemic will end this week. https://www.nycaribnews.com/articles/foreign-exchange-restrictions-eased-in-bahamas/

Central banks. Investment decisions over the next three months will be influenced by forward guidance from central banks, according to global fund managers in Reuters polls who recommended increasing equity exposure and lowering bond holdings in June. https://finance.yahoo.com/news/funds-eye-central-banks-guidance-124802638.html

Central banks, Federal Reserve. “[D]eveloping a CBDC could, I believe, pose considerable risks.”—Randal Quarles. https://www.federalreserve.gov/newsevents/speech/quarles20210628a.htm

Banks as currency agents …

Banks should think of themselves as the private sector currency agents of the State.  The currency encapsulates the economic, commercial, and social value of a political economy.  A State-issued currency ties the State’s citizens to a particular value system while providing a mechanism that accounts for a citizen’s wealth and serves the citizen as a medium of exchange for goods and services, including the payment of taxes to the State.

Banks help distribute State-issued currency primarily through the creation of credit.  Banks are a “port of call” for currency; receiving deposits from its customers, capital from its investors, and placing State-issued Treasurys, underwritten by the central bank, into its investment portfolio.  Banks issue loans to their customers creating money in the process.  This money can be deposited at other banks or used by consumers or businesses for purchases.  The fees for financial services provided to consumers and the interest earned from lending to end users and producers provide the banks with income that, along with the income generated by businesses financed by banks, can be taxed by the State.

The fallout from the 2007-2008 financial meltdown has created a narrative that banks are entities separate from the State; private sector “bad boys” whose reckless behavior from creating financial instruments doomed to perform poorly caused people to lose jobs and credit to freeze.  The narrative had citizens questioning why these misbehaving banks received bailouts from the U.S. government while ordinary citizens had to bear the brunt of the rippling effects throughout the economy. 

The answer is simple.  Selling debt instruments and earning fees for placing these instruments into the hands of investors part of the implicit agreement between the State and the banks as currency agents.  Even as elected officials such as Senator Elizabeth Warren, Democrat of Massachusetts and Senator Bernie Sanders, Independent of Vermont, argue for increased regulation of America’s larger banks, the truth of the matter is that dismantling the mechanisms of banking would be too costly to the State’s currency distribution system.  The State would have to re-write its laws to support an alternative system and for all the noise against the current system, seems to be in no rush to replace it.     

Interbank Market News Scan: Federal Reserve, foreign exchange, central banks …

28 June 2021

Links to follow ….

Interbank. China is taking another step to loosen its capital controls and in the process is giving onshore investors greater access to a previously hard-to-reach bond market.  https://www.bloomberg.com/news/articles/2021-06-27/how-china-is-cracking-a-window-for-its-bond-investors-quicktake?sref=oriheOus

Interbank. Only half of loan investors believe their instruments have robust fallback language designed to ensure a smooth transition from the London interbank offered rate, according to a recent survey from Barclays Plc. https://www.bloomberg.com/news/articles/2021-06-25/libor-fears-persist-for-loan-market-with-six-months-to-deadline?sref=oriheOus

Foreign exchange. Deutsche Bank AG compensated a Spanish company for losses the firm made after purchasing foreign-exchange derivatives from the German lender, people familiar with the matter said. https://www.bloomberg.com/news/articles/2021-06-28/deutsche-bank-compensates-firm-over-fx-derivatives-mis-sales?sref=oriheOus

Central banks. They spent 2020 uniting to fend off a historic recession, but central banks are slowly starting to take different paths in 2021. https://www.bloomberg.com/news/newsletters/2021-06-28/what-s-happening-in-the-world-economy-peak-central-bank-stimulus?sref=oriheOus

Central banks. Inflation is now an “influencer” of the Fed and the other central banks, but no more than that. The real question is how the central banks will respond to it, if at all, past their public comments. https://seekingalpha.com/article/4436858-central-banks-claim-check

Central banks, Federal Reserve. The Federal Reserve Board on Friday announced it will extend for a final time its Paycheck Protection Program Liquidity Facility, or PPPLF, by an additional month to July 30, 2021. The extension is being made as an operational accommodation to allow additional processing time for banks, community development financial institutions, and other financial institutions to pledge to the facility any Paycheck Protection Program, or PPP, loans approved by the Small Business Administration through the June 30 expiration of the PPP program. https://www.federalreserve.gov/newsevents/pressreleases/monetary20210625a.htm

U.S. Senate Committee on Banking, Housing, and Urban Affairs. Today, U.S. Senator Chris Van Hollen (D-Md.), a member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, and Committee Chairman Sherrod Brown (D-Ohio) applauded the bipartisan House passage of their resolution to repeal the Trump Administration’s so-called True Lender Rule through the use of the Congressional Review Act. This regulation, finalized in the last months of the prior Administration, allows predatory lenders to skirt state laws meant to curb interest rates on loans and opens the doors for these lenders to prey on vulnerable consumers. The legislation now heads to the President’s desk for signature.  https://www.banking.senate.gov/newsroom/majority/house-passes-van-hollen-brown-legislation-to-strike-down-trump-era-rent-a-bank-rule-sending-it-to-the-presidents-desk

U.S. House Committee on Financial Services.  This week, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, gave the following statement on the House floor urging the passage of Senate Joint Resolution 15, a resolution that invalidates the Trump Administration’s “True Lender” rule. https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=408055

Interbank Market News Scan: The Caribbean, foreign exchange …

25 June 2021

Eastern Caribbean Central Bank-interest rates

ECCB Fixed Deposit Rate-1 month0%
ECCB Fixed Deposit Rate-2 months0%
ECCB Fixed Deposit Rate-3 months0%
*ECCU Minimum Savings Deposit Rate2%
ECCB Discount Rate2%
Source: Eastern Caribbean Central Bank

*Eastern Caribbean Currency Union

Foreign exchange rates of interest

Where base currency is XCDRates as of 1:03 am AST 25 June 2021Where term currency is XCDRates as of 1:03 am AST 25 June 2021
XCD/EUR0.3104EUR/XCD3.2216
XCD/GBP0.2657GBP/XCD3.7634
XCD/USD0.3704USD/XCD2.7000
XCD/CAD0.4559CAD/XCD2.1932
XCD/NGN152.1620NGN/XCD0.0066
XCD/CNY2.3963CNY/XCD0.4169
XCD/PLN1.4038PLN/XCD0.7118
XCD/PEN1.4613PEN/XCD0.6723
Source: OANDA

Eastern Caribbean Central Bank.  The Eastern Caribbean Partial Credit Guarantee Corporation (ECPCGC) announces two new products aimed at helping regional Micro, Small and Medium Enterprises (MSMEs) rebound and grow their businesses. https://www.eccb-centralbank.org/news/view/ecpcgc-offers-additional-products-to-help-small-businesses

Federal Reserve. The Federal Reserve Board on Thursday released the results of its annual bank stress tests, which showed that large banks continue to have strong capital levels and could continue lending to households and businesses during a severe recession. https://www.federalreserve.gov/newsevents/pressreleases/bcreg20210624a.htm

Foreign exchange. Chinese banks’ stockpile of foreign-currency deposits has surpassed $1 trillion for the first time, creating an opportunity for Beijing to allow greater freedom for capital to flow out of the country. https://www.bloomberg.com/news/articles/2021-06-24/chinese-banks-stockpile-record-1-trillion-of-foreign-currencies?sref=oriheOus

Foreign exchange. The EU is unlikely to grant U.K.-based financial firms automatic market access in all areas post-Brexit, according to a top British minister. https://www.bloomberg.com/news/articles/2021-06-24/u-k-says-equivalence-with-eu-unlikely-in-all-areas-of-finance?sref=oriheOus

Interbank. China’s interbank treasury bond index in net price opened at 985.08 points Friday, higher than the previous close of 984.84 points, according to the China Foreign Exchange Trade System. http://www.china.org.cn/china/Off_the_Wire/2021-06/25/content_77586945.htm

Interbank Market News Scan: Eastern Caribbean, foreign exchange …

24 June 2021

Eastern Caribbean Central Bank-interest rates

ECCB Fixed Deposit Rate-1 month0%
ECCB Fixed Deposit Rate-2 months0%
ECCB Fixed Deposit Rate-3 months0%
ECCU (1) Minimum Savings Deposit Rate2%
ECCB Discount Rate2%
Source: Eastern Caribbean Central Bank
  • (1) Eastern Caribbean Currency Union

Foreign exchange rates of interest

Where base currency is XCDRates as of 1:15 am AST 24 June 2021Where term currency is XCDRates as of 1:30 am AST 24 June 2021
XCD/EUR0.3103EUR/XCD3.2222
XCD/GBP0.2653GBP/XCD3.7689
XCD/USD0.3704USD/XCD2.7000
XCD/CAD0.4556CAD/XCD2.1946
XCD/NGN151.8860NGN/XCD0.0066
XCD/CNY2.3986CNY/XCD0.4168
XCD/PLN1.4026PLN/XCD0.7122
XCD/PEN1.4509PEN/XCD0.6771
Source: OANDA

Foreign exchange. On 26 May 2021, the Cabinet of Ministers of Ukraine adopted the Resolution adopted a Resolution setting out the procedure the tax authority should use to fine legal entities for violating currency legislation. https://www.lexology.com/library/detail.aspx?g=b6a6e9df-ddaa-49c7-821a-355d5b0cf097

Foreign exchange. The U.S. dollar vacillated below an 11-week high versus major peers on Thursday as traders attempted to navigate conflicting signals from Federal Reserve officials on the timing of a withdrawal of monetary stimulus. https://www.cnbc.com/2021/06/24/forex-markets-dollar-us-federal-reserve.html

Interbank. Flour millers in Nigeria are turning to the street market for dollars to buy wheat after the central bank restricted the use of the U.S. currency to buy grain imports, according to the country’s third-largest operator. https://www.bloomberg.com/news/articles/2021-06-23/nigeria-flour-millers-squeezed-by-central-bank-ban-on-imports?sref=oriheOus

Interbank. The overnight Shanghai Interbank Offered Rate (Shibor), which measures the borrowing cost of China‘s interbank market, decreased 9.3 basis points to 2.208 percent Wednesday. http://www.china.org.cn/china/Off_the_Wire/2021-06/23/content_77581796.htm Interbank. China’s central bank boosted its short-term cash injection for the first time since March as it sought to cater to a growing demand for liquidity while keeping leverage in check. https://www.bloomberg.com/news/articles/2021-06-24/china-lifts-short-term-cash-injection-for-first-time-since-march?sref=oriheOus

Interbank Market News Scan: Eastern Caribbean, foreign exchange, banks …

Links to follow …

Banks. The stock market has been volatile, but it’s been a very solid year on -— and for — Wall Street. https://www.cnn.com/2021/06/21/investing/bank-stocks-economy/index.html

Banks.  Bitcoin has fallen below $30,000 for the first time in more than five months, hit by China’s crackdown on the world’s most popular cryptocurrency. https://news.yahoo.com/china-tells-banks-stop-supporting-044021987.html

Eastern Caribbean Central Bank-interest rates

ECCB Fixed Deposit Rate-1 month0%
ECCB Fixed Deposit Rate-2 months0%
ECCB Fixed Deposit Rate-3 months0%
ECCU (1) Minimum Savings Deposit Rate2%
ECCB Discount Rate2%
Source: Eastern Caribbean Central Bank
  • (1) Eastern Caribbean Currency Union

Eastern Caribbean Securities Exchange

Bank share prices as of 22 June 2021

The Bank of Nevis Ltd.$3.75
Bank of St. Vincent and the Grenadines$6.70
East Caribbean Financial Holding Company Ltd$4.00
Grenada Co-operative Bank Ltd.$8.88
Republic Bank (Grenada) Ltd.$45.00
St. Kitts Nevis Anguilla National Bank Ltd.$2.80
Source: Eastern Caribbean Securities Exchange

Foreign exchange rates of interest

Currency PairsRates as of 1:15 am AST 23 June 2021
XCD/EUR0.3109
XCD/GBP0.2662
XCD/USD0.3704
XCD/CAD0.4577
XCD/NGN152.0730
XCD/CNY2.3974
XCD/PLN1.4063
XCD/PEN1.4522
Source: OANDA

Interbank Market News Scan: Eastern Caribbean

Links to follow …

Banks. When the European Union launched the euro two decades ago, economists wondered if this novel currency might pull off a feat none other had managed in the post-war period: to challenge the mighty American dollar. https://www.economist.com/finance-and-economics/2021/06/21/the-international-role-of-the-euro

Banks.  Online-only assets like Bitcoin and Ethereum have become a lucrative opportunity for millions of savvy amateur investors, but now Russia’s central bank is warning people to steer clear of what could end up being a very risky buy. https://www.rt.com/russia/527147-crypto-central-bank-warning/

Banks. London Offered Interbank Rates (LIBOR). https://www.brecorder.com/news/40101846/libor-interbank-offered-rates

Banks. Wall Street regulators delivered a uniform message to President Joe Biden Monday: the huge capital buffers that banks built up over the pandemic are protecting the financial system from looming threats. https://www.bloomberg.com/news/articles/2021-06-21/banks-robust-capital-mitigates-risks-regulators-tell-biden?srnd=premium&sref=oriheOus

Banks. Banks looking to expand into the wild world of crypto are getting a pointed reminder from regulators of the risks involved. https://www.bloomberg.com/news/articles/2021-06-21/banks-chart-cautious-crypto-policy-with-regulators-taking-aim?sref=oriheOus

Eastern Caribbean Securities Exchange

Bank share prices as of 21 June 2021

The Bank of Nevis Ltd.$3.75
Bank of St. Vincent and the Grenadines$6.70
East Caribbean Financial Holding Company Ltd$4.00
Grenada Co-operative Bank Ltd.$8.88
Republic Bank (Grenada) Ltd.$45.00
St. Kitts Nevis Anguilla National Bank Ltd.$2.80
Source: Eastern Caribbean Securities Exchange

Eastern Caribbean Central Bank-interest rates

ECCB Fixed Deposit Rate-1 month0%
ECCB Fixed Deposit Rate-2 months0%
ECCB Fixed Deposit Rate-3 months0%
ECCU (1) Minimum Savings Deposit Rate2%
ECCB Discount Rate2%
Source: Eastern Caribbean Central Bank
  • (1) Eastern Caribbean Currency Union

Foreign exchange rates of interest

Currency PairsRates as of 1:15 am AST 22 June 2021
XCD/EUR0.3114
XCD/GBP0.2670
XCD/USD0.3704
XCD/CAD0.4597
XCD/NGN151.9260
XCD/CNY2.3940
XCD/PLN1.4125
XCD/PEN1.4578
Source: OANDA

22 June 2021

Would Virgin Islanders prefer to be an American outpost?

Growing up in the U.S. Virgin Islands I noticed the rift between those who considered themselves ancestral Virgin Islanders and those of us who were either born in or children of people born in the Eastern Caribbean.  This rift, in my opinion, was fueled by the native Virgin Islander belief that being citizens of the United States gave them a certain privilege or right to be condescending to anyone else from the Caribbean.  It was never surprising to hear a “local” refer to down-islanders as “garrot” or “islo” in reference to the fact that the person being persecuted came from further south and east in the Lesser Antilles.

It is no wonder so many of our families started separate civic organizations like the Nevis Benevolent Society or formed churches such as the Bethel Baptist Missionary Baptist Church whose membership was comprised mostly of individuals who hailed from the British Virgin Islands, St. Kitts, Nevis, Anguilla, and Antigua.

On the other hand, arguably this behavior from native-born Virgin Islanders, albeit condescending and disrespectful of those whose lineage did not historically run through the Virgin Islands from birth, may be part of a native attempt to maintain a Virgin Islands identity unique from other Caribbean nations and territories. 

Virgin Islanders have likely struggled with identity dualism since the territory was formally transferred to the United States from Denmark in March 1917.  The identity struggle likely intensified as the U.S. Virgin Islands found itself surrounded by a Caribbean tossing off governance from European powers and going their own way.  Jamaica gained its independence from the United Kingdom in 1962.  Barbados and Guyana also broke from the United Kingdom in 1966.  St. Vincent and the Grenadines went their own way in 1979, while Antigua and Barbuda and St. Christopher (St. Kitts) and Nevis gained independence in 1981 and 1983, respectively.

The schizophrenia of being a Virgin Islander and an American tends to be received with more indifference and a smirk from Caribbean nations versus respect as a Caribbean neighbor.   

This schizophrenia apparently seeped into the constitutional politics of the Virgin Islands.  In its fifth attempt in 2010 to draft a constitution for the US Virgin Islands, the constitutional drafting committee ran afoul of the US Department of Justice by recommending tax exemptions for ancestral native Virgin Islanders and native Virgin Islanders.  A native Virgin Islander is defined as someone born in the Virgin Islands on or after 28 June 1932.  An ancestral native Virgin Islander is defined as someone born in the Virgin Islands prior to and including 28 June 1932 as well as descendants of such individuals whether residing in the territory or not.

Under the proposed constitution, ancestral native Virgin Islanders and their descendants would receive a tax exemption on ownership real property.  This exemption would not flow to native Virgin islanders or any non-Virgin Islander domiciled in the territory.  A law distinguishing who would receive and not receive a tax benefit based on place and timing of birth, in the opinion of the Justice Department, would create multiple tiers of citizens. These designations, apparently not tied to a legitimate governmental interest, would run afoul of the Equal Protection Clause of the U.S. Constitution.

The Department of Justice was also concerned with the drafting committee’s apparent attempt to usurp United States sovereignty over the coastal waters of the Virgin Islands.  In its constitutional proposal, the committee provided language that the Virgin Islands would exercise sovereignty over its inter-island waters and over waters extending twelve nautical miles from each island’s coast up to the borders with international waters.  The lack of mention of US sovereignty over this twelve-mile area, in the Justice Department’s opinion, raised the concern that such a measure, if enacted, would violate federal law.  

At the end of the day, the initiative to draft a constitution adds weight to what University of the Virgin Islands professor Paul Leary identified in a 2020 opinion piece discussing the feasibility of an independent U.S. Virgin Islands.  The Virgin Islands is experiencing “the absence of a clear national identity.”  His observation is a reminder that a national identity is the platform upon which a country must be built.  The Virgin Islands are way too small to play “nation-state” politics.  The size of the territory would only lead to more intense conflict among groups of native and non-native Virgin Islanders trying to divide up a near non-existent pie.

The cohesiveness necessary for nationhood in the U.S. Virgin Islands may be two to three generations away, but given the economic circumstances of the territory, where young people constantly move to the mainland for work and business opportunity, the development of a cohesive nation may experience unacceptable delay.  In the meantime, the Virgin Islands of the United States may have to optimize its status as an American outpost in the Caribbean; subject to scorn from its independent neighbors, relying on the United States for its identity, and pushing away its Caribbean brethren.