PLACENCIA, Belize (CMC) – Caribbean Community (CARICOM) leaders have been told they would need to bring the issue of corresponding banking to the United Nations as regional countries discuss the threat posed to the banking sector in the Caribbean, a senior regional banking official has said.

The regional leaders began a two-day Inter-sessional summit here yesterday and will have a report from their finance ministers who met here on Monday to formulate a regional response to the threat to correspondent banking relationships and the possible loss of access to the international financial markets by mainly the regional indigenous banks.

“Several international banks, mainly in the US and Europe, have signalled to client banks in the region an unwillingness to continue carrying their business. The so-called ‘de-risking’ by the global banks threatens to impact several critical services including remittance transfers,” CARICOM said in a brief statement.

Governor of the Central Bank of Belize, Glen Ysaguirre, who participated in Monday’s meeting, told reporters that the discussions “were very productive”, adding “there will be a series of recommendations” that will go before the leaders.

The Chairman of the Committee of Central Bank Governors (CCBG) said he expected that the regional leaders would make a formal statement on Tuesday. “I could say that there is recognition that this issue needs to be publicised on the international level and so there was a very excellent recommendation for it to be taken to the UN …because of the seriousness of the economic implications for the region,” he said.

He said there is also the view that the rest of the region would want to follow suit and do as Belize did and take this matter to Washington and address the United States regulators, “as that is the most important connection that we need any way to access the system”.

Ysaguirre said that during Monday’s meeting there was a presentation by the Central Bank of Barbados on a report that they conducted in the region to assess the implications of correspondent banking and make some recommendations on the way forward.

“The participation was very robust and it revealed to us that what we have been saying for quite some time about this correspondent banking issue is one of the most serious threats to the region. It’s existential in nature and I think it is more serious in terms of its economic implications to the region than I would even want to think about climate change, for that matter, because it is most immediate and urgent.”

MONTSERRAT

He said the meeting also learnt that Montserrat has only two commercial banks and “they had relationships with Bank of America and they have learned that Bank of America has given them notice that within 30 days they will terminate that.

“That will be very devastating for that small economy. Without a correspondent banking relationship, that would do what even the volcano in Montserrat couldn’t have done – which is to have those people evacuate that island under the threat of that volcano.

“With correspondent banking being cut off from access to the international financial system, it will certainly force them to look otherwise for economic survival. And the story is the same throughout the Caribbean,” Ysaguirre said.

He said that regional countries have turned to Belize for some advice and guidance on the way forward, “given that we have been trailblazing this issue for the last two years and based on the success they think we may have had with our recent trip in Washington in terms of getting the attention of the US authorities”.

He said there was the suggestion that this ‘is not an issue with Belize as a jurisdiction, but this is a most unfortunate development on the whole de-risking issue”.