Caricom urged to raise corresponding banking issue at UN

Caricom leaders are being pushed to raise the corresponding banking problem at the United Nations as a regional threat to the banking sector.

The regional leaders are holding a two-day intercessional summit, which wraps up today, Wednesday, in Belize. The leaders were due to consider a report from their finance ministers who met on Monday to formulate a regional response to the threat to correspondent banking relationships and the possible loss of access to the international financial markets mainly by 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," Caricom said in a brief statement.

Governor of the Central Bank of Belize, Glen Ysaguirre, who participated in Monday's meeting, told reporters that the discussions "were very productive", adding there will be a series of recommendations that will go before the leaders.

"I could say that there is recognition that this issue needs to be publicised on the international level, and so there was a very excellent recommendation for it to be taken to the UN ... because of the seriousness of the economic implications for the region," said Ysaguirre, who chairs the Committee of Central Bank Governors (CCBG). Regional leaders were also expected to make a formal statement.

He said there is also the view that the rest of the region would want to follow suit and do as Belize did and take this matter to Washington and address it with the United States regulators "as that is the most important connection that we need anyway to access the system".

Ysaguirre said during Monday's meeting there was a presentation by the Central Bank of Barbados on a report that they conducted in the region to assess the implications of correspondent banking and make some recommendations on the way forward.

"The participation was very robust and it revealed to us that what we have been saying for quite some time - that this correspondent banking issue is one of the most serious threats to the region. It's existential in nature and I think it is more serious in terms of its economic implications to the region than I would even want to think climate change is for that matter, because it is most immediate and urgent," said the central banker.

He said the meeting also learned that Montserrat, which has only two commercial banks, has been given notice by Bank of America that within 30 days they will terminate the relationship.

"That will be very devastating for that small economy. Without a correspondent banking relationship, that would do what even the volcano in Montserrat couldn't have done, which is to have those people evacuate that island under the threat of that volcano," said the CCBG chair.

"Without correspondent banking, being cut off from access to the international financialsystem, it will certainly force them to look otherwise for economic survival. And the story is the same throughout the Caribbean," Ysaguirre added.

He said that regional countries have turned to Belize for some advice and guidance on the way forward, "given that we have been trailblazing this issue for the last two years and based on the success they think we may have had with our recent trip in Washington, in terms of getting the attention of the US authorities".

- CMC