in which exchange control appears headed for complete abolition.

The Bermuda Monetary Authority (BMA) has recommended to Government legislative changes that would require payments inside Bermuda to be quoted or expressed, and, ideally settled, in Bermuda dollars.

The Authority's 1997 Report & Accounts, recently tabled in Parliament, said the BMA recommends that such a provision should cover all payments inside Bermuda other than transactions between exempted entities.

The report said, "Such an amendment should enable Bermuda's current Bermuda dollar system to continue to exist without the machinations of an Exchange Control Act.'' Resident to resident payments are, at present, required to be expressed in Bermuda dollars under the Exchange Control Act 1972.

But in anticipation of the total abolition of exchange control, the Authority's recommendations are aimed at ensuring that local transactions continue to be made in Bermuda dollars.

The BMA has suggested that the conditions be attached to the Bermuda Monetary Authority Act 1969, which currently empowers Bermuda dollar currency notes and coins legal tender for the payment of any sum.

Meanwhile, the 1997 BMA annual report also notes that by last December, BMA's portfolio of investments totalled $85.8 million. Over the 28 years since the establishment of the Bermuda Monetary Authority Act 1969, earned interest from that portfolio has paid for the entire operations of Authority.

For the 1997 year, the BMA earned interest income of $5,143,000 from the investment portfolio, representing the bulk of their total earnings of $5,739,000.

Expenses totalled $4,280,000, the majority of which ($2,380,000) was taken up in salaries and employee benefits.

BMA operations have included management of exchange control, supervision of local banks (inside and outside Bermuda), deposit and trust companies, the Credit Union, the Bermuda Stock Exchange, the Bermuda Commodities Exchange, the Bermuda Commodities Exchange Clearing House, collective investment schemes and the processing of applications to form companies and other functions.

Those operations were all funded at no direct cost to the public purse. But over those same 28 years, more than $41 million generated by the Authority's investment portfolio has, at the request of the Finance Ministry, been paid into Government's consolidated fund.

The BMA made a profit of $1,459,000 last year, up 9.4 percent or up about $200,000 from 1996. Some $980,000 of that was sent directly to the consolidated fund.

For the first full year, Bermuda banks in 1997 stored Bermuda dollar currency notes belonging to the Authority.