ECCB 2025-2026 Annual Report

EASTERN CARIBBEAN CENTRAL BANK ANNUAL REPORT 2025 - 2026

Financial Stability

Climate-Related Financial Risk Integration In April 2025, the Bank formalised a partnership with Agence Française de Développement (AFD) to advance the integration of climate-related financial risks into regulatory and supervisory frameworks. This multi-year initiative will assess institutional exposure to climate risks, build capacity in environmental and social governance, and promote green financing across the financial system. Preparatory work during the reporting period included finalisation of project terms of reference and the establishment of a Project Steering Committee comprising regional regulators and industry representatives. Basel II/III Implementation The Bank continued its phased implementation of the Basel II/III Capital Framework: ; Pillar 1 (Minimum Capital Requirements): Following its implementation in July 2024, compliance reviews were undertaken to ensure adherence. ; Pillar 2 (Supervisory Review and Evaluation Process): Development of the SREP framework progressed, with ongoing assessments of institutions’ Internal Capital Adequacy Assessment Processes (ICAAPs). ; Pillar 3 (Market Discipline): Preparatory work continued, with full implementation targeted for 2027. Ongoing engagement with financial institutions ensures a collaborative and adaptive approach to strengthening capital and liquidity standards. Other Supervisory Developments The Bank advanced several additional initiatives to reinforce financial system stability: 1. Engagements with credit institutions

to operationalise reserve and account requirements under the governing legislation; 2. Discontinuation of the Letter of Comfort as a regulatory instrument, aligning the framework with modern capital standards; 3. Finalisation and enhancement of supervisory frameworks for key regional institutions, including the Credit Bureau and the Eastern Caribbean Partial Credit Guarantee Corporation; 4. Issuance of guidance on outsourcing arrangements in response to increasing adoption of cloud-based services; 5. Introduction of new prudential standards on capital measurement and corporate governance to strengthen institutional oversight and financial soundness; 6. Continued resolution and supervisory oversight actions, including the extension of administrative arrangements for specific institutions; 7. Documentation of lessons learned from past mergers, acquisitions, and resolutions to inform future interventions. Office of Financial Conduct Work continued towards the establishment and operationalisation of the Office of Financial Conduct (OFC), a department of the Central Bank, which will have responsibility for supervising and regulating market conduct for LFIs. Sensitisation meetings on the draft Banking (Amendments) Bill were held with a broad cross section of stakeholders including relevant government ministries, national regulators, chambers of industry and commerce, trades and labour unions, civil society and non-governmental organisations in all eight ECCU member countries. LFIs were kept abreast of OFC developments at their quarterly meetings with the Central Bank. The public was kept informed via the ECCB website.

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