Correspondent banking withdrawal could damage Regional financial sector – IMF

The International Monetary Fund (IMF), in its March Article IV Consultation on Belize, said that action needs to be taken by regulatory authorities in which correspondent banks are domiciled to prevent damage to dependent banks and the economies in which they do business.

In tones suggesting urgency, the fund stated, “Directors concurred that the recent termination of corresponding banking relationships with Belizean banks and banks in many other countries could have a significant impact on financial stability and economic activity in the affected countries.”

The IMF said financial intermediation could be damaged and seriously disrupt economic activity as a result of the withdrawal of services.

Among temporary policy solutions suggested by the IMF is the creation of cash-processing windows at regional central banks, the IMF stated in its consultation paper.