Briefing on Financial Regulation Conference:
Governance and Regulation of the Financial Sector – Post Meltdown:
What has changed?
As the economic recessions rooted, in the global financial crisis, take firm hold in most countries in 2009, the world no longer wonders what the impact of the sub-prime meltdown is likely to be and here in the Caribbean we need no longer wonder what the effects will be.
Many reasons have been touted as being the main contributory factor to the financial crisis, from greedy capitalists to ineffective rating agencies, bad luck to a time-bomb waiting to happen, dangerous derivatives to poor regulation and governance. Whatever the reason, it has become clear that the regulatory and governance framework that was put in place to protect against these kinds of events was not as strong as originally thought. The crises of the developed world and our own developments closer to home have shown us in vivid clarity that amendments will be needed.
To discuss some of these issues and the way forward for us in the region, the Bank will be hosting a one-day seminar on the theme “Governance and Regulation of the Financial Sector – Post Meltdown: What has changed?” on October 14th at the Frank Collymore Hall from 8:00am. Expert speakers from both the region as well as abroad have been assembled to discuss the state of affairs with respect to financial governance and regulation since the 2008 meltdown that shook the financial markets and occasioned an unprecedented crisis.
Senator The Honourable Darcy Boyce will deliver the feature address, highlighting the position of the Barbadian government on the direction of governance and financial regulation in Barbados. This will be followed by a presentation by Mr. Geoffrey Bell, Principal of Geoffrey Bell and Company and Executive Secretary of the Washington-based Group of 30. As a key advisor to the Bank and to the Barbados Government, Mr. Bell is very familiar with the Barbadian and Caribbean economic and financial landscape. He will discuss the international economic environment pre- and post-crisis as well as highlight the approach of multilateral organisations and offshore financial centres in the wake of the meltdown and the accompanying regulatory and governance changes. As such, he will set the scene for the day’s proceedings, helping to put the ensuing discussion in perspective.
The governance and regulation of the financial sector is not a new area of concern for the Bank, as we held a conference on Corporate Governance in 2002 and had already started to look at possible amendments to the Financial Institutions Act even before the crisis. This recent wave of discussion that has swept the globe has caused us to pause, however, as the whole world rethinks what should now constitute best practice. To help shed some light on this area, the Bank has invited Ms. Jane D’Arista to bring us up to date on what changes are being debated in developed countries. Ms. D’Arista is a Research Associate at the Political Economy Research Institute at the University of Massachusetts, Amherst and the Financial Markets Center and is one of the leading experts in U.S. monetary policy and financial regulation. She will discuss the recent changes implemented by the European Commission, the Financial Services Authority and the Federal Reserve Commission as the American and European authorities attempt to rebuild trust, accountability and transparency in their financial services sector. Ms. D’Arista will also touch on ‘regulation outside the box’, which focuses more on rules calibrated to the interconnectivity of an institution to the financial system, reverse convertible debentures, limiting the size or interconnectivity of financial institutions, living wills, and so on. In the Caribbean, we have also started to consider the extent to which systemically important conglomerates, either operating in the financial sector, the productive sectors or some combination of the two, should be subject to some form of regulation given the impact they could have on our small open economies should they fail.
One of the recipients of criticisms in the wake of the crisis has been the very accounting systems that underpin the financial sector and the assessment and treatment of risk. In particular, the International Financial Reporting Standards and specifically the mark-to-market rule have come under scrutiny, especially when trying to price assets for which no active market for trading exists. This is a problem that we in the Caribbean are all too familiar with, given the liquidity concerns on our stock exchanges and the virtually non-existent secondary market for government securities. Mr. Amar Battacharya, the Director of the Group of 24 of the International Monetary Fund, will shed some light on the latest discussions in these areas as well as examine the macroprudential approach to supervision that may need to be fully implemented in the region. He will also bring us up to date on the viability of the Basel II framework and what is emerging as best-practice in corporate governance. All of these debates currently occupy the minds of policymakers, businesspeople and academics alike because the outcomes will help to shape the global financial market. Decisions on the payment and settlement systems and the treatment of alternative investments will be critical to financial market stability in the future.
To bring these matters closer to home, the seminar will also feature a panel discussion with experts on financial sector regulation from throughout the region. The speakers will deliberate on the pace of harmonisation of economic and financial policies and regulation as the region works towards the full operation of the CARICOM Single Market and Economy (CSME), the implications of cross-border banking, financial conglomerates and financial holding companies for regulation and consolidated supervision as well as cross-border crisis management and resolution for systemically important firms.
The Bank has deliberately organised the seminar to allow for as much discussion as possible and after each presentation, participants will be given an opportunity to engage the speakers in lively discussions on their respective areas of expertise as well as join the deliberations in the regional panel discussion. It is our intention that this seminar to be as interactive and informative as possible for participants and presenters alike, so we invite you to add your voice to the discussion on the direction of governance and regulation of the financial sector in the region.
To register, you can download the registration form from www.centralbank.org.bb and submit it to Ms. Roxanne Hinds at firstname.lastname@example.org or via fax at (246) 427-1431. You may also contact Ms. Hinds directly by phone at 436-6870 ext. 6532. Although for logistics reasons we will prefer you to preregister, you can also register on the morning of the seminar. We look forward to seeing you on October 14th at the Frank Collymore Hall as we determine the next step forward.