ECCB 2020-2021 Annual Report and Statement of Accounts

FINANCIAL SECTOR STABILITY

Supervision of Mergers and Acquisitions in the Eastern Caribbean Currency Union The ECCB continued its enhanced supervision of LFIs, in light of their acquisition of other banking operations in the ECCU, giving due consideration to systemic importance and free and fair competition. In consultation with the Monetary Council, the ECCB approved on 22 December 2020, the applications for the transfer of the assets and liabilities of Royal Bank of Canada to a Consortium of national banks in Antigua and Barbuda, the Commonwealth of Dominica, Montserrat, Saint Christopher (St Kitts) and Nevis and Saint Lucia, pursuant to Section 43 of the Banking Act, 2015. International Financial Reporting Standard (IFRS) 9 Implementation In light of the COVID-19 pandemic, the ECCB provided regulatory guidance to all Licensed Financial Institutions on the application of the International Financial Reporting Standard 9 (IFRS 9) requirements. The prudential guidance included the treatment of various initiatives such as loan moratoria and restructuring, cognisant of the potential impact on the financial statements of our licensed financial institutions. The ECCB continued to monitor LFIs’ compliance with IFRS 9. Financial Stability Report The ECCB continued to report on risks to the financial sector emanating from the macroeconomy. Key to this is the production of the Annual Financial Stability Report as well as inputs into the Monetary, Credit and Financial Conditions Report. The Bank produced the report based on analysis of the commercial banking sector, the credit union sector and the insurance sector in the ECCU. The Bank also worked with the Single Regulatory Units (SRUs) in each member country to collect and analyse the data for the credit union and insurance sectors. The Annual Financial Stability Report was produced for 2019; preparations have begun for the 2020 edition. Develop a Macro-Prudential Framework Work continued towards the development of a macroprudential policy framework, which will complement micro-prudential regulation of financial institutions operating in the ECCU. The Bank contributed towards the development of an Optimal Regulatory Framework for the financial system. The proposed framework retains the existing regulatory portfolios but is enhanced with a regional standard setting body. This framework was developed with a view to, (1) reducing the level of fragmentation within the financial system, (2) increasing oversight, (3) improving financial sector safety nets, (4) improving consumer protection and business conduct supervision and (5) creating a framework to allow for more relevant legislation and regulations. Issuance of Revised Prudential Returns Quarterly revised commercial banks’ prudential returns were implemented in April 2020 and financial year end 2020 returns were implemented during the latter half of 2020. The balance sheet data submitted by banks were revised to meet international requirements of the monetary and financial statistics. The ECCB was therefore able to disseminate monetary and financial statistics based on these revised prudential returns.

Why the Enhanced Regulatory Approach?

Read 2019 Financial Stability Report

EASTERN CARIBBEAN CENTRAL BANK ANNUAL REPORT 2020/2021 7