ECCB 2022-2023 Annual Report and Financial Statements

Eastern Caribbean Central Bank Annual Report 2022 - 2023

sessions covers areas such as building a strategic roadmap, stress testing, and disclosure and reporting.

integrating climate-related financial risks into their risk management frameworks. In April 2022, a Climate Risk Specialist was assigned to the ECCB and has responsibility for developing a reporting template to be used by LFIs, for physical and transition risk assessments.

In the first quarter of 2022, the Bank administered a climate risk survey to LFIs. The results highlighted the need for capacity building among LFIs in

Implementation of Basel II/III

Having adopted a phased approach to implement its Basel II/III capital framework (Basel II/III), the ECCB attained the critical milestones listed below. Phase I of the implementation roadmap corresponds with Pillar 1 of Basel II/III- Minimum Capital Requirements, while Phase II corresponds with Pillar 2- Supervisory Review Process and Phase III corresponds with Pillar 3 - Market Discipline.

Phase I Pillar 1

The ECCB intensified its efforts to finalise and integrate the new Basel II/III prudential return 16 (PR16) into the existing prudential reporting framework. A pilot was conducted to test PR16 with selected banks. The way forward includes the go-live reporting in the third quarter of 2023-2024, to signal the full implementation of Phase I.

Phase II Pillar 2 The Bank issued the Internal Capital Adequacy Assessment Process (ICAAP) Prudential Standard in April 2022 and LFIs will submit their first ICAAP reports in the third quarter of the 2023-2024 financial year. Additionally, the ECCB is developing supporting prudential standards and the framework for its Supervisory Review and Evaluation Process for Pillar 2 activities. The ECCB expects to fully implement Phase II of its roadmap by the end of June 2024. The ECCB will continue to conduct assessments and engage in industry consultation on the implementation of additional capital and liquidity measures, including the capital buffers, Liquidity Coverage Ratio and in 2024, the Net Stable Funding Ratio.

Phase III Pillar 3

The ECCB will commence the research and development of a framework for Phase III (market discipline) of the Basel II/III implementation roadmap. Phase III of the Bank’s Basel II/III implementation programme is expected to be fully implemented by December 2024.

Basel II - This Revised Capital Adequacy Framework was designed to improve the way regulatory capital requirements reflect underlying risks and to better address the financial innovation that had occurred in recent years. The changes aimed at rewarding and encouraging continued improvements in risk measurement and control. The Basel III measures were developed in response to the financial crisis of 2007-09. The measures aim to strengthen the regulation, supervision and risk management of banks.

Source: Bank for International Settlement (BIS)

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