||Central Bank Of Barbados
Caribbean people have been reassured that they have little to fear from recent banking developments in the United States.
Earlier this month, Silicon Valley Bank collapsed and the US federal government moved quickly to close Signature Bank, which was on the verge of collapse.
While the government’s decision to guarantee customers’ deposits averted a widespread run on the banks, concern remains about the impact of the development.
However, Dr. Kevin Greenidge, Governor of the Central Bank of Barbados says there is no reason to worry.
He was speaking during the March 2023 edition of the Bank’s Caribbean Economic Forum on the topic “Managing Caribbean Economies in an Era of Many Crises."
Responding to a question from intervenor Alicia Nicholls who is a Junior Research Fellow with the Shridath Ramphal Centre at the University of the West Indies Cave Hill Campus, Dr Greenidge said any effects are quite minimal since Caribbean banks’ linkages are mainly Canadian and regional.
“We would’ve done a thorough analysis of the impact from the recent collapse of those two banks on our banking system both locally and regionally. We have come to the conclusion that there is absolutely nothing to worry about,” he said.
Dr. Greenidge added that regulators would continue to monitor and stress test the financial system to ensure it remains strong.
“We must keep in mind that even at the height of the global financial crisis in 2008, our Caribbean banks remained sound and were quite resilient even though much of the world came under a lot of pressure so I want to alleviate any concerns whatsoever along those lines,” he said.
Gervase Warner, Chairman of the CARICOM Private Sector Organisation, supported the Governor’s view noting that “we don’t have nearly the amount of linkages that you might expect banks to have in these developed economies.”
However, he said he was concerned that the banking crisis could precipitate an economic recession in markets on which Caribbean countries rely for our exports or tourism.
Warner, said there was a “real chance” the US could go into recession and something similar could happen in Europe.
This, he said, would affect oil and gas prices in the region’s commodity-based economies.
View the March Caribbean Economic Forum in its entirety below.