The Caribbean Community (CARICOM) will employ the full gamut of options available to it to confront the banking crisis that is threatening the Region Chair of the Community and Prime Minister of Belize, the Hon. Dean Barrow said. He underscored the necessity of collective action, sensitisation and mobilisation.
Among the steps Heads of Government have decided on at their Twenty-Seventh Intersessional Meeting which concluded in Belize on Wednesday, was to establish a high level advocacy group, led by Antigua and Barbuda Prime Minister, the Hon. Gaston Browne. Prime Minister Browne’s mission is to represent the Community’s interest at all levels, including with the the United Nations (UN), the World Trade Organisation (WTO), and the United States Congress.
The goal is to underline to all the key players, including the US Congress “how absolutely existential this issue is for us”, Prime Minister Barrow said. A letter under the Chairman’s hand is also to be dispatched to the President of the United States.
The threat relates to the possible loss of access to the international financial markets by mainly the Regional indigenous banks. Several international banks, mainly in the US and Europe, have signalled to client banks in the Region an unwillingness to continue carrying their business. The so-called ‘de-risking’ by the global banks threatens to impact several critical services including remittance transfers. International trade, the facilitation of credit card settlements for local clients are among the other effects the Region faces.
At a press conference Wednesday afternoon in Placencia, Belize, Prime Minister Barrow dealt at length with the issue of correspondent banking relations and conceded that there was no simple solution.
It is going to take a great deal of doing… all we can say is that we are determined to pursue all possible means until we get the kind of resolution … that we want,” he pointed out to representatives of the media.
PM Browne’s mission, the Prime Minister pointed out, was just one avenue through which the Community hoped to find a solution to the problem which he had earlier described as a “possible correspondent banking Armageddon” and for which the Region had to wage a relentless war.
PM Barrow pointed to the scenario in Montserrat to underscore the gravity of the situation. That CARICOM Member State has only two banks and they are “having their status revoked”.
He reiterated that banking regulators had assured that there was no “problem with our jurisdictions” and added that all CARICOM Member States were Financial Action Task Force (FATF) compliant. He rejected outright the notion that corruption in governments may be one of the factors responsible for the de-risking.
When the CARICOM Mission begins its campaign, it will involve not just talking to regulators – and I imagine part of that conversation will then be focusing on the declared willingness of regulators to look at the infrastructure to see if it can be made less stringent while still retaining its effectiveness. But the Mission will also talk to correspondent banks, in the same way that Belize as an individual country has been attempting to do. And we recognise that the conundrum of the correspondent banks not wanting to assume the burden of the regulatory requirements given that the returns from our business are fairly small, is something that we have to address,” the Chairman said.
He has recommended that CARICOM Member States pool their business to achieve critical mass and to make it worthwhile for the correspondent banks. The governors of Regional Central Banks, and the Committee of Ministers of Finance on Correspondent Banking, that Heads of Government have established, will consider the modalities of that recommendation.
There is no doubt that as a group and acting collectively we can achieve far more, certainly in relation to this particular issue, than if we try to go our separate routes. So I think there is a lesson in all this: that despite the difficulties and despite accepting certain realities, we must never lose sight of or let go of the ultimate need for us to move together as one Community,” Prime Minister Barrow said.