ECCB 2023-2024 Annual Report

EASTERN CARIBBEAN CENTRAL BANK ANNUAL REPORT 2023 - 2024

The ECCB’s commitment to building climate change resilience across the region strengthened focus on harnessing the power of the financial system to realise low-carbon transition in member states as work advanced on greening the financial system.

T he Eastern Caribbean Currency Union (ECCU) experienced an easing of macro-financial conditions in the 2023/2024 period relative to the previous year. The previous period, dominated by high levels of inflation globally, required that Central Banks with advanced economies implement higher monetary policy rates to counter the rising inflation. Those lingering effects contributed to a slowdown in global economic activity during 2023. Similar to global economic developments, regional economic activity slowed in 2023 and continued to experience elevated levels of risks and persistent areas of vulnerability including credit risk. Those conditions were due to the impact of stubbornly high levels of inflation on wages, an elevated concentration of household debt on the balance sheets of financial institutions, and vulnerabilities associated with climate change and intense climatic events. The ECCU’s financial system, however, maintained its resilience and stability, due to the high levels of liquidity and adequate level of capital. The ECCB undertook a range of activities and implemented several policies to mitigate risks and fulfill its mandate to maintain the safety and soundness of the ECCU financial sector. Those activities included: 1. Crafting the draft Deposit Insurance Framework;

2. Developing the Conceptual Model for establishment of a Regional Standards Setting Body for regulation of Non-Bank Financial Institutions (NBFIs); 3. Designing the Renewable Energy Infrastructure Investment Facility; 4. Developing a climate risk stress-testing framework for deposit-taking institutions; 5. Developing and initialising the Basel II/III framework; and 6. Creating the Conceptual Model for establishing an Office of Financial Conduct and Financial Inclusion. Those initiatives and reforms were also designed to allow the ECCB to appropriately regulate financial intermediaries, and further identify incipient threats to the financial system and provide a safeguard for consumers and institutions. Additionally, the ECCB collaborated with the national regulators in its member countries, particularly on macro-surveillance, to: 1. Conduct a more comprehensive assessment of the credit union and insurance sectors; 2. Obtain a deeper understanding of regulatory developments; 3. Facilitate capacity building; and 4. Gain insight and guidance on issues of concern.

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