BOJ and Credit unions reach MoU
Finance Minister Dr Peter Phillips has announced that a Memorandum of Understanding (MoU) has been agreed on the Bank of Jamaica (BOJ) and the country's credit unions.
"I can report that the credit unions, after extensive discussions with the Bank of Jamaica and with myself, are at the point where a memorandum of agreement has been arrived at between themselves and the bank whereby they will accord with the regulatory standards set by the Bank of Jamaica," Phillips said.
Hailing the leadership of the credit union for taking the "mature position" which has led to the MoU being crafted, Phillips said that it is "a tremendous example of cooperation". He said that the BOJ/credit unions regulations are close to being finalised and will form the basis of the agreement.
The credit unions, including 43 which fall under the umbrella of the Jamaica Co-operative Credit Union League, had assets of J$75.56 billion as at September 2013. The other deposit takers supervised by the BOJ had total assets of $977.15 billion at December 2013.
Audley Shaw, the opposition spokesman on finance, had urged Phillips to recognise the need for greater regulatory oversight over credit unions and cooperative societies.
"No financial institution must feel that because they are 100 per cent privately owned, they can do anything with depositors' money," Shaw said.
The opposition spokesman on finance pointed, for example, at the National People's Cooperative Bank, where some $665 million in deposits was improperly spent to buy property and office equipment such as computers. He said that there is not only the need for a forensic audit, which Derrick Kellier, the agriculture minister, said "is coming", but said there is the need for proper oversight of such institution.
That oversight, Phillips said, is not far away.
"As soon as the Ministry of Agriculture has completed its audit, there is another aspect to it which will ensure that there is adequate supervisory oversight being exercised in relation to that institution," the finance minister said.
The House of Representatives on Tuesday passed amendments to the BOJ Act to allow for the expansion of the mandate of the central bank, for it to ensure the stability of the banking system.
If passed in the Senate, the amended law will among other things allow for the bank to initiate inspections, request information pertinent to macro-prudential oversight, issue rules, standards and codes pertinent to macro-prudential oversight, and establish and update a central financial system database.
The BOJ will be empowered to establish a financial system stability committee to oversee the financial system and advise the central bank in best practices to promote and maintain financial-system stability.