The concept of the Bermuda dollar breaking its links with the United States dollar is not a `credible' way forward for the Island, according to a leading analyst.

Preston Hutchings, chief investment officer of RenaissanceRe Holdings, in an opinion piece on Page 4 of this paper today, rubbished the idea of monetary independence from the US$.

"The idea isn't worth a Bermudian cent,'' wrote the Bermudian analyst.

Vital to maintain US$ link In the article Mr. Hutchings replied to an editorial in this newspaper which applauded the Government's decision to enhance the independence and supervisory powers of the Bermuda Monetary Authority.

He said that while these measures introduced by the Government are essential in maintaining Bermuda's standing as a reputable offshore jurisdiction, he said he doubted that these controls should be expanded.

Mr. Hutchings said: "The Gazette's editorial appeared to suggest that the BMA's charter should be expanded to enable the authority to influence interest rates in order either to control local inflation or to encourage local investment.

"Absent exchange controls, it is doubtful that the BMA can successfully influence the Bermuda dollar rates.

"It is similarly doubtful that the BMA can do much to control inflation.

"Lastly, as a matter of public policy, it is questionable whether the BMA -- as distinct from the Government -- should make much of an attempt to encourage local investment.'' In his article Mr. Hutchings said that banks in Bermuda were different from those in the United States and Europe, where interest rates are raised or lowered in order to control economic activity. He said that Bermuda was too small to be able to do this.

He added: "Without a domestic monetary policy, our monetary policy is by default that of the Federal Reserve, the guardian of our currency into which our dollar is freely convertible.''