ECCB 2022-2023 Annual Report and Financial Statements

Eastern Caribbean Central Bank Annual Report 2022 - 2023

Financial Stability As a part of its internal audit assurance work programme for the financial year, the Bank will conduct an audit of the Regional Governments Securities Market (RGSM). This review will examine the developmental work that the Bank has pursued in that space. This audit is timely, as stakeholders across the currency union seek reputable investment options. The ECCB will continue efforts towards its readiness for full implementation of the new International Organisation for Standardisation (ISO) standard that should be adopted in November 2025. The ISO has developed a new standard (ISO20022) for payment messaging which will provide enhancements and improved efficiencies in the processing of financial transactions. The Society for Worldwide Interbank Financial Telecommunications (SWIFT) is facilitating the adoption of the ISO20022 Programme that will establish this new messaging service. Following four years of coexistence, the corresponding legacy SWIFT MT messages will be decommissioned on the SWIFT platform. In regard to financial system supervision, during the financial year 2023-2024, the Bank will focus on: 1. Strengthening the regulation of Licensed Financial Institutions (LFIs) through the implementation of applicable prudential standards, and aligning the Banking Act, 2015 to best regulatory practices; 2. Enhancing the supervisory framework through the operationalisation of the Basel II/III capital adequacy framework, including implementation of Pillar 1 and Pillar 2 to bolster the capital position and risk management function of LFIs. The way forward includes the issuance of the Pillar 1 Capital Standard, completing the testing phase of the Quarterly Statement of Capital, Income and Expenditure

form (PR16), conducting two parallel runs in the second and third quarters of 2023, and go live reporting in quarter four of 2023, to signal the full implementation of Phase I; 3. Enhancing the supervisory framework through the implementation of prudential standards and reporting guidelines for climate-related financial risk; and 4. Drafting new data protection and privacy legislation for the ECCU, under the Caribbean Digital Transformation Project (CARDTP). This legislation is considered integral to a digital payment system and will be informed by the Data Protection and Privacy Policy that was developed with the assistance of The World Bank. Furthermore, the following work will be advanced: 1. Drafting the Financial Stability Legislation. 2. The development of macro-prudential instruments for the ECCU; 3. Full integration of environmental risks into the analytical frameworks for financial stability including stress testing; 4. Continued macro-prudential surveillance and monitoring of the ECCU’s financial sector and Systemically Important Financial Institutions; 5. Production and publication of key research papers and policy notes on financial stability; 6. Publication of the Annual Financial Stability Report; 7. Continued engagement with the Directors of Social Security Systems in the ECCU; 8. Adopting IMF Financial Soundness Indicator (FSI) 2019 Guide as the new compilation framework for compilation of FSIs; 9. Launching the new PR16 reporting form to collect information based on BASEL II/III; and 10. Design of institutional approaches for Financial Market conduct and improve micro-prudential regulation of the financial sector.

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