A statement issued by the Central Bank of Barbados (CBB) Monday said that the issue was discussed at the FSB meeting in London last week and that the CBB Governor Dr. DeLisle Worrell commended the FSB for its position.
“We must compliment the FSB for having opened an avenue for small international financial centres like Barbados to participate in the process of decision making on this matter of vital importance to the growth of our international business and financial services sector,” said Worrell, who attended the plenary meeting of the FSBin his capacity as co-chair of the Regional Consultative Group for the Americas (RCG_A) for the period 2015-17.
Correspondent banks, which are mainly large, international banks domiciled in the United States of America, Europe and Canada, provide Caribbean states with vital access to the international financial system, by offering services to smaller, domestic banks and financial institutions to complete international payments and settlements.
However, many banks, which provide correspondent banking services have been seeking to manage their risks by severing ties with institutions in the region.
The issue of corresponding banking was a major item at the annual summit of Caribbean Community (CARICOM) leaders in Guyana in July.
Worrell said that international business in Barbados has been hampered by a complex web of international regulations and strictures, even though Barbados has an enviable reputation as a competitive, well-regulated, transparent country, which provides financial services of high quality.
He noted that the de-risking strategies adopted by banks operating in Barbados have been introduced very reluctantly, and only because they see no other way to ensure that they are not the victims of some sensational news item.
The CBB said what makes their situation difficult is the fact that damage is done, and their share price may fall, even if the news proves to be unfounded.
The CBB said that a second item of interest to Barbados on the FSB agenda was financial technology with the meeting being told that the innovations most likely to affect how business is done are the distributed ledger technology, arrangements for small business to raise funds from many small contributors via the Internet, and online lending by financial institutions.
The CBB said that these services could affect consumer banking, transfers of funds, payments, investment, and the financing of small business.
“The potential benefits of financial technology include increased competition for traditional financial institutions, greater access to finance, more diverse financial services, and possibly an overall increase in the efficiency of the financial sector.
“However, there may be potential drawbacks because there could be a growing number of less well supervised financial institutions,” the CBB added.
The FSB, which is chaired by Dr. Mark Carney, Governor of the Bank of England, brings together central banks and financial regulators of the world’s most powerful nations to oversee the process of international financial reform.
The RCG_A is one of six affiliate groups established by the FSB. The members of the RCG_A are Canada, Barbados, Argentina, Bahamas, Bermuda, Bolivia, Brazil, British Virgin Islands, Cayman Islands, Chile, Colombia, Costa Rica, Guatemala, Jamaica, Mexico, Panama, Paraguay, Peru, Uruguay, and the United States of America.
- Countries: Barbados