This disclosure came from ECCB Monetary Council Chairman Dr. Ralph Gonsalves, who said that the banking sector is one of the most critical sectors of the Currency Union’s economies.
With ECCU financial institutions experiencing declines in profitability and performance since 2009, as a result of the global crisis, which saw all economies facing significant contractions in their domestic economies, Chairman Gonsalves said the Council is pursuing a comprehensive banking strategy, which is aimed at strengthening the resilience of the financial system of the currency union.
Dr. Gonsalves indicated that this would be done through a six-step policy initiative that would include a new Banking Bill that seeks to protect all depositors.
According to Prime Minister Gonsalves of St. Vincent and the Grenadines, the first policy would be a strategy to fully protect depositors by the ECCU Governments.
Secondly, he revealed that the Council had approved the Banking Bill for passage by member governments.
This bill will strip finance ministers in the ECCU from being allowed to issue and revoke licenses and give that power to the Central Bank.
Further, Gonsalves said that there will be:
· Pre-emptive measures to deal with bank problems
· Appropriate levels of capitalization for banks and credit institutions, and
· Clear criteria for persons who can be appointed as directors and managers of banks.
The Monetary Council, within its “comprehensive resolution strategy”, Gonsalves said, approved amendments to the 1983 ECCB Agreement Act, which would strengthen powers of the Central Bank.
He noted that these amendments would seek to address several insufficiencies that were highlighted when the Central Bank intervened in assisting three commercial banks in Antigua and Barbuda and Anguilla.
“Fourth, the Council approved the drafting of regional foreclosure legislation to allow efficient management of collateral by financial institutions.
“Fifth, the council approved an agreement and draft bill to establish the Eastern Caribbean Asset Management Corporation. This corporation will assist with the management of non-performing loans,” Gonsalves explained.
According to the ECCB Monetary Council chairman, the Council approved the establishment of a Deposit Insurance fund, but he did not indicate how the fund would work only stating that further plans for the fund will be finalized.
He opined that the strategy put forward will result in a “stronger banking sector, greater financial stability and faster economic progress” for ECCU member countries.