The Central Bank of Barbados, the island-state's banking regulator, is introducing a 2% fee on purchases of foreign currency for cash, bank drafts and wire transfers on Monday.

Credit, debit and travel cards will become subject to the fee on 1st September. The fee, which was initially supposed to be in place on 1st July, is intended to raise revenue for the Government. The delay came at the request of the Barbados Bankers Association and ought to make it easier for banks to adjust their computer systems.

The FXF will be applied to the Barbados value of the foreign currency transaction. HNWs and others who buy US$500 in cash at a rate of 2.02857 will pay $1,034.58 instead of $1,014.29. The Bank's 'guidance note' states that the fee is not applicable to:

• transactions from foreign currency accounts held by residents or non-residents;
• transactions from foreign currency accounts held by the international business and financial services sector;
• foreign currency trades on the interbank market between authorised foreign exchange dealers;
• foreign currency trades between the Bank and authorised foreign exchange dealers; and
• foreign currency “cover transactions” provided by the Bank to authorised foreign exchange dealers for their customers.