The Financial Stability Report is a Valuable Resource

Good morning and welcome to this educational session on Breaking Down the 2018 Financial Stability Report.

The Central Bank of Barbados and, fellow regulator, the Financial Services Commission (FSC), have published the Financial Stability Report annually since 2011. The report checks the health of our financial services and is, therefore, a valuable resource to help us regulators, and you, the licensees, understand how your sector or the entire financial services system performs each year. It highlights warning signals and influences the design of any required responses to address stability issues in insurance companies, commercial banks, credit unions, pension funds, mutual funds, and deposit taking finance and trust companies.

We, the Bank, and the FSC, communicate the findings of the Financial Stability Report to the sector in various ways. We hold discussions, issue news releases, sit down with the media, conduct social media campaigns, as well as post the document on the Bank’s and FSC’s websites. We always involve the industry in our marketing efforts. Our outreach, in the past, targeted the chief executive officers in the sector. We, however, recognise that your communicators and marketers are strategic to sensitizing your organisations to news and developments in your industry. You inform and educate your businesses about the latest development in your sector, and you rely on research to complete your market surveillance and to design and execute your strategies. Communicators and marketers add value to organisations when we provide these services.

Permit me to quote from a Harvard Business Review article that I read recently:

“External monitoring has long been the purview of dedicated internal strategy teams, external consultants, or forward-looking executives. But for organisations to respond more quickly to outside patterns and trends, all managers must see this as an important task worthy of their time. Failure to pay attention to external signals – or waiting until a signal becomes strong before acting – can have harsh consequences.”

We garner such information about our sector in several ways: from networking, magazines, newspapers, industry leaders, and research papers. The Financial Stability Report is another tool to add to your arsenal of information gathering.

Today, Carlon Walkes, a senior economist at the Bank and Kester Guy, the Chief Executive Officer of the FSC, will help you to digest the contents of the document and discuss with you the findings for the various sectors. We hope that the insights will bolster your understanding of the financial services sector and equip you to enhance your counsel to the C-suite. I am pleased that CEOS and other managers have joined their communications and marketing staff. Your presence signals the importance that you attach to the research, your interest in staying on top of industry trends, and perhaps your desire to help us communicate the findings to our stakeholders.

We encourage you to tell your colleagues about the document, share the information, market the findings in your workplaces, and use them in your operational and strategic plans.

This event is a win-win for you, the Bank, and the FSC. We the regulators enhance your knowledge about how the financial services sector works and performs; we strengthen our engagement with you, our industry partners; and we get to know each other, network, build relationships and foster deeper partnerships.

I commend the report to you. If you have not read it, let today’s session pique your interest to do so. Why? In addition to assessing the performance of the sector, the 2018 Financial Stability Report provides a synopsis of the state of the economy, analyses the country’s first-ever debt restructuring exercise, evaluates the impact of IFRS9, and identifies how Barbadians prefer to pay for goods and services. The report also covers how the sector would stand up to natural or man-made shocks. The researchers perform stress tests to determine the sector’s resilience to such occurrences.

The September 2019 edition of Finance and Development, an International Monetary Fund magazine, reminds us that stress tests on the sector are essential because they help to asses if a bank can survive a recession if half of its mortgage clients lose their jobs and stop paying debts. Or, do insurers have enough money to pay out claims if an earthquake measuring 7 on the Richter Scale hits this country? These are few of the issues that stress tests help us to understand and plan for.

Finally, the strength and stability of the financial services sector underpins our economic stability, growth, and development. When we all understand how the industry works, the interrelationships and connectedness, the concentration, the warning signals, among other things, we are better positioned to advise, to respond, and to act. The system and the country benefit.

Thank you.