2018 Financial Stability Report

T ABLE OF C ONTENTS Preface – From the Governor ........................................................................................................ 1 1. OVERVIEW OF FINANCIAL STABILITY IN THE ECCU ................................................................ 2 2. OVERVIEW OF THE FINANCIAL SECTOR IN THE ECCU ............................................................ 5 CHAPTER 1: THE MACRO-FINANCIAL ENVIRONMENT AND KEY RISKS INFLUENCING THE ECCU REGION ......................................................................................................................................... 11 1.0 International Economy .................................................................................................. 11 1.1 The Domestic Economy ................................................................................................. 12 1.2 Key Vulnerabilities and Risks ........................................................................................ 13 1.3 Cyclical Risk .................................................................................................................... 15 1.4 Structural Risk ................................................................................................................ 17 1.5 Interconnections ............................................................................................................ 19 CHAPTER 2: FINANCIAL PERFORMANCE AND SOUNDNESS OF DEPOSIT-TAKING INSTITUTIONS: BANKING AND CREDIT UNION SECTORS ..................................................................................... 21 2.0 Banking Sector ............................................................................................................... 21 2.1 Credit Union Sector ....................................................................................................... 26 CHAPTER 3: FINANCIAL PERFORMANCE AND SOUNDNESS OF NON-DEPOSIT-TAKING INSTITUTIONS: INSURANCE COMPANIES .................................................................................... 31 3.0 Overview ........................................................................................................................ 31 3.1 Risk Assessment ............................................................................................................. 33 BOX 1: INSURANCE AND FINANCIAL STABILITY IN THE ECCU ..................................................... 34 CHAPTER 4: POLICY INITIATIVES FOR ENHANCING FINANCIAL STABILITY IN THE ECCU ......... 36 4.0 Overview ........................................................................................................................ 36