General
Press Releases
Press
Release August
7, 2002Governor
of the Central Bank of Barbados says developing countries should
have greater input in international financial standards and
codes
Governor of
the Central Bank of Barbados, Dr. Marion Williams is suggesting
greater participation by developing countries in the designing
and implementation of international financial codes and
standards.
The Central
Bank Governor, speaking at the Commonwealth Secretariat's
Symposium on Banking and Financial Services, observed that the
current "across the board approach" to crafting and
implementing the codes and standards could be to the
disadvantage of developing nations.
The
Governor, who was speaking specifically on the standards and
codes and the implications for countries from the perspective of
a central banker, argued that since the adoption of codes and
standards was critical to financial stability in developing
countries they should have a greater involvement in their
formulation.
"In an
increasingly international environment predictability has become
an essential quality in conducting cross–border transactions
and to that extent if developing countries wish to be part of
the mainstream of international finance the adoption of reliable
codes and standards is important," Dr. Williams told the
symposium.
"A high
degree of transparency in a number of areas, including data
dissemination, payment systems, monetary and financial policies
and banking supervision should serve to enhance the stability of
the financial system," Dr. Williams further stated.
However, she
believed that developing countries, much to their detriment,
could find implementation overruns for several reasons. Some
codes and standards, she explained, were not always applicable
to countries where institutional development was at an embryonic
stage, where the cost associated with the implementation process
was prohibitive and where there was a genuine shortage of the
necessary personnel.
In putting
the case for greater involvement by developing states and the
abandonment of a "one size fits it all approach," Dr
Williams cited the International Organisation of Securities
Commission rule on securities regulation, which states that
regulation should facilitate capital formation and economic
growth. However, in her view, excessive regulation could stymie
growth and the perception of what is excessive might differ in
the developing and developed world.
The Central
Bank Governor therefore suggested that the implementation of the
codes and standards should reflect each country's unique
development and reform priorities.
"Governments
should be able to publicly articulate their commitment to adopt
key standards and, as appropriate, announce action plans for
their implementation, including targets, timetables, resource
allocations and technical assistance," the Governor told
the symposium.
"It
must be acknowledged that different standards have different
priorities for different countries, and that these priorities
are likely to change over time … Standards and codes need to
be applied flexibly, in a manner that allows for country
differences and conditions.
Like some conditionality requirements, once standards and
codes become too extensive and too detailed, they may overburden
the implementation capacity of many member countries and also
blur the real priorities or benefits."
Dr. Williams
identified the current Basle Core Principles of Effective Bank
Supervision as the model to follow, since in her view, they are
the "most universal and the most appropriate to any
circumstance." She
hoped that the New Accord would also exhibit these qualities.
On the issue
of cost, the Governor intimated that financial assistance might
be necessary because the technology related expenses associated
with implementing the standards were high.
Speaking
specifically about Barbados' adherence to international
financial codes and standards, Dr. Williams reported that the
country had made " good progress" in this area.
She disclosed that Barbados had been following the Basle
Core Principles, as well as guidelines issued by the Financial
Action Task Force and the Caribbean Action Task Force guidelines
for several years.
Governor
Williams also told the delegates that in spite of the cost,
Barbados had instituted several other measures to safeguard its
financial system: an Automated Clearing House and a Real Time
Gross Settlement System were being implemented, and although
there are only twenty- odd listed companies, a regulatory
authority - the Securities Exchange of Barbados - has been
established.
The Governor
reiterated that these measures had to be implemented because
they were simply too critical to the island's financial
stability and economic growth and development: "The cost of
not doing so (setting up these systems) is not a domestic cost;
it is a cost which relates to the perception by the
international community and is not a cost we can afford to
avoid," she stated.
The Central
Bank head advised developing countries to do likewise, stating
that: "While developing countries should continue to try to
influence the process, in the absence of any likelihood of
modification to take account of our special circumstances, I
urge all developing countries to implement them."
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