Jamaica Gleaner newspaper – CARICOM leaders are planning a global conference in the Caribbean “in the not-too-distant future” to assess appropriate responses to issues related to corresponding banking relationships.
Regional countries have warned that corresponding banks, which enable the provision of domestic and cross-border payments and terminated in some jurisdictions, could adversely affect their economic development and have been making representations to countries such as the United States in a bid to reverse the trend.
Antigua and Barbuda Prime Minister Gaston Browne, who is leading the CARICOM initiative, told the Caribbean Media Corporation that his committee would be recommending to regional leaders at their annual summit that ended Wednesday in Georgetown the staging “of a global stakeholder conference” to bring all the players together.
“We are also looking at the possibility of engaging different advocacy groups in the United States and Britain to ensure that we get across our message effectively,” he said, noting that the Caribbean’s position could be further enhanced with the various charities and foundations complaining of their inability to do business because of the corresponding banking situation.
“Even, for example, the Bill Gates Foundation, the Clinton Foundation, they are having difficulties moving funds. Many of them are dealing with global issues, including AIDS that affect the Caribbean region, and it is necessary for us to bring all of these stakeholders together so that we can address this issue and to carve out the space for the Caribbean,” said Browne.
“Some form of incentive for these corresponding banks to provide the service to Caribbean countries are very, very important, even if it means modifying the sanctions and the penalties in order to make it easier for corresponding banks to do business in the Caribbean. Something has to be done.
Otherwise, they will create a bigger problem,” he added.
In a paper released in Washington last Thursday, the International Monetary Fund (IMF) said that policy responses to withdrawal of correspondent banking relationships need to be tailored to the specific circumstances of a country or a region, and should include continued effort to build understanding of the causes and implications of this phenomenon.
“To that end, it is key to go beyond surveys. Authorities need to reach out directly to financial services providers to further improve their data collection to better understand this phenomenon,” said the IMF.
A CARICOM Secretariat statement, issued ahead of the summit, noted that the assessment of de-risking scenario, saying “it is unfair and the predictions about its impact on the region are dire, and the call to action is extremely urgent”.
“Regional banking institutions rely on such relationships in order to allow residents to conduct international financial transactions. The issue has been occupying the attention of regional policymakers, following signals by international banks that they are unwilling to continue carrying the business of regional banks,” the statement said.
Barbados Prime Minister Freundel Stuart said that if unresolved, the effect on his country’s international business sector would be profound.
“The economy of Barbados has also, over the years, relied very heavily on remittances from our very large diaspora in various [parts] of the world – Canada, the United States and the United Kingdom. So this is just not another issue for Barbados, it is fundamental to our way forward and, therefore, we fully identify with our colleagues in CARICOM who are similarly threatened,” said Stuart.
He said that in terms of lobbying in the capitals of the world where big banks operate, it was imperative to “get them to understand that this is an existential issue for us in Barbados … and there can be no relaxation of our advocacy in that regard. We just have to ensure that we turn the situation around,” said the Barbados PM.
The CARICOM statement said that at least eight financial institutions in Barbados, seven in Jamaica and five in Belize and others in Antigua and Barbuda, Montserrat and other member states have been affected by a termination or restriction of correspondent banking relationships.
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