ECCB 2014-2015 Annual Report and Statement of Accounts

EASTERN CARIBBEAN CENTRAL BANK

The new Banking Act is the evidence of a fundamental recognition of the need for a new regime in our financial system

be reformed by restructuring the national banks and leveraging the foreign banks into greater alignment with the region’s growth and development objectives. Within the single space the major challenges would be the creation of synergies between organisations and markets, and developing appropriate financial instruments for different types of firms. With respect to synergies, the relationships among strong commercial banks, both national and foreign, the consolidated development bank and the ECEF are critical. The ECEF would supply equity, the development bank, long term capital on reasonable terms with a moratorium, and the commercial banks working capital. This would be bundled with technical assistance and other critical facilitatory arrangements including factoring and leasing, export credit and insurance, and broker/dealership services. The final challenge facing the ECCU member countries in their development thrust is the critical task of developing a domestic private sector that is regionally and internationally competitive and capable of generating foreign exchange inflows and creating quality jobs. While foreign direct investment is important, it cannot replace a dynamic domestic private sector. In fact, the countries can maximise the benefits from foreign direct investment if there is a vibrant domestic sector to interact with the foreign investors. Indeed, this type of private sector is also an attraction for foreign investment.

The new Banking Act is the evidence of a fundamental recognition of the need for a new regime in our financial system. It symbolises the need for a more rigorous and legally supported arrangement for the regulation of commercial banks which, as was noted earlier, are the dominant institutions in the ECCU financial sector. It also acknowledges the need for reduced fragmentation in our financial system which would provide the economies of scale and scope to lower costs and increase the viability of financial products. In addition, it provides the opportunity for a structural reorientation of the lending portfolios of banks towards the productive sectors of the economies. It is therefore fair to say that, with the new Banking Act, we have finally entered a new era in the banking and financial history of the ECCU which is expected to see the creation of a banking and financial system that is more aligned with the growth and development objectives of the member countries.

K Dwight Venner Governor

ECCB ANNUAL REPORT 2014/2015

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