ST. JOHN’S: The Caribbean Community (CARICOM) has strengthened its partnerships within the region in order to intensify its efforts to address the withdrawal of correspondent banking services from some regional institutions.
Antigua & Barbuda Prime Minister, Gaston Browne, who is leading CARICOM’s advocacy on the issue, recently met with the heads of the Caribbean Development Bank (CDB) and the Jamaica National Building Society (JNBS) to discuss CARICOM’s advocacy in response to the emerging de-risking practices by correspondent banks.
“De-risking of correspondent banking services is an existential threat facing the Caribbean region which has the potential to decimate our living standards,” said Browne following the meeting in St. John’s. “We must work collectively as a region to address this threat to our survival.”
Correspondent banks, which are mainly large, international banks domiciled in the United States of America, Europe and Canada, provide Caribbean states with vital access to the international financial system by offering services to smaller, domestic banks and financial institutions to complete international payments and settlements.
However, many banks which provide correspondent banking services have been seeking to manage their risks by severing ties with institutions in the region.
The issue drew interest from CARICOM at its 27th Inter-Sessional Meeting of the Conference of Heads of Government in Belize in February. During that session, a team led by Browne was appointed to lobby policymakers in the United States of America, Canada and the United Kingdom on the threat to Caribbean economies from the withdrawal of correspondent banking services.
Browne said the JNBS and CDB will provide technical assistance to advance CARICOM’s advocacy efforts and work with CARICOM to identify solutions to the challenges. They will also help CARICOM coordinate implementation efforts and strengthen monitoring mechanisms.
As part of its contribution, JNBS is developing a website to increase awareness about the emerging issue. The CDB will continue to work with the Caribbean Financial Action Task Force to build capacity of member countries.
“Correspondent banking services are a public global good that is essential for participation in global trade and is particularly important for small island economies,” said Browne.
General Manager of JNBS, Earl Jarrett, discussed the threat to services such as remittances, on which the region depends. Highlighting challenges faced by his organization’s remittance company in the Cayman Islands, he said the value of remittances was equivalent to a significant percentage of gross domestic product for many receiving countries in the region.
“Remittances are the lifeline for migrant communities across the region,” said Jarrett. “And, Jamaica alone, with a Diaspora population of some three million, represents one of the largest recipient countries in the region, accounting for amounts equivalent to approximately 17 per cent of our gross domestic product (GDP).”
The meeting also included discussions about an upcoming CARICOM conference on de-risking to be held in Antigua & Barbuda next month.