ECCB 2016/2017 Annual Report

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ECCB ANNUAL REPORT 2016/2017

REGIONAL GOVERNMENT SECURITIES MARKET (RGSM)

•  • the development of a vision for large value payments in the ECCU; •  • the review of licensing regimes under the Money Services Business Act; and •  • the adoption of the CPSS-IOSCO Principles for Financial Market Infrastructure. As part of the governance framework for the Payment System, appropriate legislation has been passed in the ECCB member countries. However, the Rules, Regulations and Guidelines to support the primary legislation have not yet been completed. The Bank established an Internal Working Group to develop Guidelines for Electronic Retail Payment Services in the upcoming year. Technology is continuing to play a critical role in the development of the Payment System. In order to ensure that the ECCU financial sector does not lag in the financial technology revolution, the Bank has been paying serious attention to the developments in blockchain technologies and digital currencies and is currently considering a proposal on a digital currency pilot. The proposal, if accepted, would take the form of a “proof of concept” experiment, using a phased approach within controlled environments to deploy, test and assess the feasibility of an EC digital currency. The Bank has also embarked on an initiative geared at developing a cadre of professionals through the development of a Working Group, conversant in the issues relating to digital currency and financial technology. This group is intended to create awareness throughout the currency union and ascertain the risks involved in the use of digital currency and other payment options emanating from the developments in technology.

The Regional Government Securities Market (RGSM) continued to provide an avenue for commercial banks and other financial institutions to invest the high level of liquid funds in the banking system. Financial institutions accounted for at least 60.0 per cent of the total bids during the current financial year. The banks remained the single largest group of investors on the RGSM, accounting for roughly 40.0 per cent of the bids. In its presentation on the RGSM at the OECS Credit Union Summit in St Vincent and the Grenadines in September 2016, the ECCB sought to increase the awareness of this sector. Activity on the secondary market increased during the financial year as the number of trades inceased to 25 from 14 in the preceding year. COMMERCIAL BANKS’ PRUDENTIAL RETURNS Steps to revise the prudential returns progressed with the incorporation of changes to the Banking Act and the capturing of the IFRS 9 standard and impaired assets guidelines. The Manual of Instructions was also updated. The financial institutions registry was updated in collaboration with regulators in the ECCB member countries to capture new institutions and to remove those that had been closed. LEGISLATIVE AGENDA During the year, the Bank continued to focus its efforts on the implementation of the Legislative Reform Programme aimed at enhancing the resilience of the financial sector of the ECCU, and the advancement of the single financial and economic space. The Bank has made considerable headway on the following pieces of legislation: