ECCB 2015/2016 Annual Report

EASTERN CARIBBEAN CENTRAL BANK

Over the next two years, global growth is projected to average 3.5 per cent with increased activity expected in advanced economies, emerging markets and developing countries. The USA, our main trading partner, is likely to remain resilient and grow on average by 2.6 per cent over the period. The outlook for the Eastern Caribbean Currency Union (ECCU) is therefore positive with expectations of growth of 3.0 per cent in the medium term which would impact positively on the fiscal accounts and the financial sector. Notwithstanding the positive forecast, the Bank is actively addressing external threats and challenges to the ECCU by developing strategies to mitigate their impact. These threats include: 1. Less than potential growth influenced by slow growth in external economies; 2. Financial sector developments relating to the termination of correspondent banking relations and adherence to FATF, FATCA and CRS; 3. The possibility of a fall-off in the Citizen by Investment (CBI) flows; 4. The economic recession in Trinidad and Tobago; 5. Future rise in oil prices; and 6. The impact on the tourism sector of the opening up of relations between Cuba and the USA. During the 2015/16 financial year, the Bank continued to focus on maintaining a stable financial system. A new Banking Act, which seeks to strengthen the framework for the regulation and supervision of banking business, was enacted. The Act addresses the ownership structures for licensed financial institutions, the licensing of financial holding companies and corporate governance of licensed financial institutions; and the establishment of a framework for the official

The Bank is actively addressing external threats and challenges to the ECCU by developing strategies to mitigate their impact.

administration of licensed financial institutions and the movement to a Single Financial Space.

Utilising the new Banking Act, the Central Bank successfully resolved the ABI Bank Ltd in Antigua and Barbuda and relinquished control of the bank effective 27 November 2015. During the financial year, the Central Bank further accelerated its efforts towards the resolution of the National Bank of Anguilla Ltd and the Caribbean Commercial Bank (Anguilla) Ltd. In light of the BAICO/CLICO debacle and the linkages between the banking and non-bank financial institutions, the Central Bank continued to support efforts aimed at strengthening the non-bank financial sector and, in particular, the establishment of a regional regulator, the Eastern Caribbean Financial Services Commission (ECFSC) for the regulation and supervision of the non-bank financial institutions. To support rising living standards for the citizens of the region, the financial system must be capable of providingcredit to theproductive sectors. In recognition of the importance of private sector investment to the growth and development of the currency union, the Bank initiated a project to undertake a diagnosis of the financial system with respect to financing for development. The project is expected to identify gaps

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ECCB A nnual R eport 2015/2016