IFCs Are Critical to Caribbean Economies, Governor Worrell Argues

IFCs Are Critical to Caribbean Economies, Governor Worrell Argues

Governor of the Central Bank of Barbados, Dr. DeLisle Worrell emphasizes the important role of the International Financial Centres (IFC’s) of the Caribbean in the economic diversification of our tourism-based economies, in a paper presented at the inaugural meeting of the Regional Consultative Group of the Americas of the Financial Stability Board.

The paper, co-authoured with Central Bank economist Shane Lowe, looks at what Caribbean countries would like to come out of global initiatives for financial reform.

Dr. Worrell and Mr. Lowe show that Caribbean IFCs compete very successfully on the global scene, on the basis of our systems of financial regulation, which have been favourably reviewed by the World Bank and IMF, and which are being upgraded to best international standards in accordance with the recommendations of those institutions.

As a result, there were no major failures reported in the leading Caribbean IFCs, namely Cayman Islands , Bermuda, The Bahamas, Barbados and the BVI.

The paper urges the FSB to bend its efforts to produce better information to measure the risks that arise through the linkages of financial institutions across many countries.

It also makes a plea for an evaluation process that is applied fairly across all countries, and does not create barriers to international competition in financial services.

The Financial Stability Board was established by the Group of 20 countries in the wake of the global financial crisis, to coordinate efforts at financial reform among its member countries.

It was soon recognised, however, that the reform efforts need to be fully informed by the circumstances and perspectives of countries beyond the G-20, and in response RCGs have been established.

Representatives of the FSB updated the December 2 meeting on FSB initiatives, including an important study which identifies some of the differences of circumstance in emerging markets and developing countries, compared with advanced economies.

A report will go to the next FSB plenary meeting, summarising the concerns of the members of the RCG Americas.

In addition, the co-chairs of the meeting are to set up a working group on effective cooperation between supervisors of the country where a foreign bank is headquartered, and the countries where it operates branches and subsidiaries.

A second working group will report on the unintended consequence of capital adequacy rules which limit the investment that foreign banks can make in domestic government securities.
The Bank invites your comments on the paper.