Legislation preserves integrity of Central Bank, say Senators

A Government Senator is hailing the Central Bank of Barbados (Amendment) Bill, 2023 as a major step in preserving the integrity of the financial institution.

During his contribution to debate on the legislation in the Upper House on Wednesday, Senator Lorenzo Harewood also suggested that because of the amendments, which grant the Central Bank greater autonomy and independence through the addition of a third deputy governor and a new board member, the Bank could not be used as a political football going forward.

“Great autonomy of the Central Bank empowers them to make decisions based solely on economic consideration without the influence of short-time political objectives. And by maintaining a laser focus on economic stability, our Central Bank can work towards long-term prosperity, ensuring that decisions are driven by data, analysis and expertise, rather than by the whims of the shifting political tides that may happen from time to time,” he said.

The senator added that the Central Bank can carry out its duties “without fear of retribution or retaliation”, which is beneficial to the country.

He contended that political interference often leads to decisions that prioritise electoral cycles or individual interests over the well-being of the economy.

As Senator Harewood sees it, when central banks are free or less influenced by such factors, they can deploy timely and necessary measures, such as adjusting interest rates to tackle inflation and promote employment and deal with other economic challenges.

“This, in turn, enables a more stable and more predictable economic environment for businesses, individuals, investors, and for everyday citizens. Political independence allows [the] Central Bank the freedom to communicate transparently with the public of Barbados, therefore reinforcing its very credibility and trust,” he said.

Minister of State in the Prime Minister’s Office, Senator Dr Shantal Munro-Knight, who tabled the bill, said that the amendments were intended to strengthen the mandate and governance of the Central Bank.

Noting that it is one of the island’s key institutions, she said it was necessary for it to be sound and function well, which required that it maintain its independence and autonomy.

Minister of State in the Prime Minister’s Office, Senator Dr Shantal Munro-Knight

As a result, amendments were made to the existing Central Bank of Barbados Act, to increase the number of deputy governors from two to three as well as to make it mandatory for them to attend board meetings.

Explaining this move, Senator Munro-Knight said there were several developments in the financial markets, such as the expanding number of digital payment facilities, and the Central Bank needed to have the capacity to respond.

“The Central Bank has to be sure that it can monitor and make sure that there is the correct regulatory framework there. There are a number of new players wanting to come into the market as well. The Government of Barbados just recently received a grant in order to establish a Blue Green investment bank and [those] are some of the areas that the Central Bank would be called on to introduce new regulations to be able to monitor as well,” she said.

“It is important to position the Central Bank in order to have the necessary capacity to be able to respond. So that the addition of an additional deputy governor, ensures then that the work of the Central Bank is ably anchored by the deputy governors and that they can respond to changing and evolving markets that we find ourselves.”

The amendments also include increasing the Board by one non-executive board member, moving the membership to six. The non-executive board member must be an accounting or auditing expert.

According to Munro-Knight, this was particularly significant so that the half-century-old organisation had the required expertise.

“In the context of the Central Bank and the amendments that we have in place, they are directly related to making sure that we do right in relation to the Central Bank and how it functions,” the Senator added. (KC) ]]>