Barbados simply cannot afford to take the threat of corresponding banking lightly, says Prime Minister Freundel Stuart.
Speaking to reporters at the start of the 37th Caribbean Community (CARICOM) Heads of Government Summit in Guyana this morning, Stuart said the matter was of “deep interest” and “fundamental” importance to the island, pointing out that the international business sector was now under threat and stood to be “profoundly affected”.
“The economy of Barbados has also over the years relied very heavily on remittances from our very large diaspora in various capitals of the world, Canada, the United States and the United Kingdom. So this is just not another issue for Barbados, it is fundamental to our way forward and therefore we fully identify with our colleagues in CARICOM who are similarly threatened,” the Prime Minister said on the first business day of Georgetown summit, where the matter is down for discussion.
Stressing that “this is an existential issue for us in Barbados”, Stuart said, “There can be no relaxation of our advocacy in that regard.
“We just have to ensure that we turn the situation around,” he added.
So far at least eight financial institutions in Barbados, seven in Jamaica and five in Belize and several others in Antigua and Barbuda, Montserrat and other member states have been affected by a termination of, or restrictions in their correspondent banking relationships.
Worried about the situation, CARICOM leaders are planning to hold a special conference “in the not too distant future” in response to the threat to CBRs, which could adversely affect their economic development.
Also speaking to reporters this morning, Antigua and Barbuda’s Prime Minister Gaston Browne, who is spearheading the CARICOM initiative on correspondent banking, said his committee was preparing to put forward a recommendation to the leaders at their summit for “a global stakeholder conference, which will bring all the stakeholders together”.
“We are also looking at the possibility of engaging different advocacy groups in the United States and Britain to ensure that we get across our message effectively,” Browne said, noting that the Caribbean’s position was likely to win support from various charities and foundations which were currently unable to do business because of the CBR threat.
“Even for example, the Bill Gates Foundation, the Clinton Foundation, they are having difficulties moving funds. Many of them are dealing with global issues, including AIDS that affect them, [as well as] the Caribbean region, and it is necessary for us to bring all of these stakeholders together, so that we can address this issue and carve out the space for the Caribbean,” the Antiguan leader explained.
He suggested that some form of incentive would have to be given to corresponding banks for them to continue to provide service to the region “even if it means modifying the sanctions and the penalties in order to make it easier for corresponding banks to do business in the Caribbean.
“Something has to be done, otherwise they will create a bigger problem,” Browne stressed.
A statement issued by the Georgetown-based CARICOM Secretariat ahead of the summit described the de-risking situation as “unfair”, adding that the implications for the region were “dire”.
“The call to action is extremely urgent. Regional banking institutions rely on such relationships in order to allow residents to conduct international financial transactions. The issue has been occupying the attention of regional policymakers, following signals by international banks that they are unwilling to continue carrying the business of regional banks,” the CARICOM statement noted.
However, in a paper released in Washington last Thursday, the International Monetary Fund (IMF) said that policy responses to CBR withdrawal needed to be tailored to the specific circumstances of a country or a region, and take into account the complexity of the CBR withdrawal.
The Washington-based financial institution said such a response could include continued efforts to build an understanding of the causes and implications of this phenomenon.
“To that end, it is key to go beyond surveys. Authorities need to reach out directly to financial services providers to further improve their data collection to better understand this phenomenon,” advised the IMF.