2018 Financial Stability Report

VIII. FINANCIAL INFRASTRUCTURE - THE PAYMENT SYSTEM

Given the prevailing high levels of liquidity in the banking system, the role of the ECHMB has shifted somewhat from the purchase of mortgages to more investment management and products. The Bank currently issues corporate bonds on the ESCE; the funds received are invested in regional and international investments. The spread between the rate of return on the investment and what is paid to the participating institutions is used to fund the operations of the ECHMB. Hence, the ECHM currently offers institutional investors another safe investment asset to invest in beyond Government paper. However, these activities pose no material risk to financial stability given the nature of the investments, which ECHMB makes. The investments, which the Bank makes, are high quality top rated investments. Thus far, Bank of St. Lucia and First Citizens Investment Services Limited have dominated the uptake in the issuances. There has been limited to no participation by institutions in Anguilla, Antigua and Barbuda, Commonwealth of Dominica, Montserrat and St Kitts and Nevis.

The ECCB operates a Real Time Gross Settlement (RTGS) system, based on straight-through processing with the use of SWIFT messaging. The commercial banks, member governments, the Securities Registry and the Eastern Caribbean Automated Clearing House (ECACH) are participants in the Interbank Settlement System. Large value transactions (values above $150,000 XCD) are settled on a RTGS basis through the Interbank Settlement System while retail payments (payments below $150,000 XCD) are settled through the ECACH. The Automated Clearing House (ACH) provides clearance for cheque based transactions but settlement occurs through the Interbank Settlement System at the Central Bank. Securities, which include regional government and private sector securities are settled through the Securities Clearance and Settlement System; operated by the Eastern Caribbean Central Securities Depository (ECCSD).

Financial Stability Report 2018

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