ECCB 2016/2017 Annual Report

ECCB ANNUAL REPORT 2016/2017

he financial system continued to be challenged by

a relatively low level of economic activity in some

member territories; market structure constraints,

including: small size, growing competition; and de-

risking initiatives by correspondent banks. The impact

of BREXIT and policies of the current US government

remain uncertain and have the potential to affect the

ECCU economies via major industries such as tourism,

construction and Foreign Direct Investment (FDI)

inflows. In addition, the Citizenship by Investment

Programme (CIP), for some territories, has come under

scrutiny.

Credit risk was considered one of the major threats

to financial stability, given the high level of non-

performing assets at some commercial banks. The

potential for contagion risk remained high within the

ECCU financial system, given the small population size

of the sub-region.

The major financial stability activities undertaken

during the year were:

Policy Development Towards Systemic Stability and

Enhanced Regulatory and Supervisory Framework

The Bank procured the services of an in-house

consultant to provide training in risk-based supervision,

consolidated supervision, the Basel Core Principles

Assessment and the implementation of Basel II.

Monitoring Threats to Financial System Stability and

Implementation of Measures to Mitigate Risk

Seven on-site examinations and several prudential

visits to commercial banks were conducted. Greater

focus was placed on enhanced monitoring of relevant

licenced financial institutions, to ensure compliance

with the requirements of the new Banking Act,

prudential standards and best practices. Where

applicable, the necessary action was taken.

Execution of the Comprehensive Resolution Strategy

and Technical Assistance Programme

The ECCB received technical assistance from the IMF

through the CARTAC with drafting a procedures manual

for consolidated supervision, licencing procedures

for holding companies, and updates to prudential

standards.

Implementation of an Effective ResolutionMechanism

The Eastern Caribbean Asset Management Corporation

(ECAMC) legislation was passed in the eight member

territories and efforts continued towards full

operationalisation of the entity.

The ECCB continued to formulate a concept note on

the establishment of a Depositor Protection Trust

(DPT) for the ECCU and participated in aWorking Group

established by CARICOM, for the implementation of a

model deposit insurance system for the region.

The Bank sought to strengthen financial integration by providing support towards the

development of strong and well capitalised financial institutions and modern, liquid

and dynamic markets as well as the necessary enabling infrastructure to improve the

efficiency of the financial system.