Following the Bank of Jamaica’s (BOJ) independence as of April 16, the Business Observer canvassed several corporate leaders including heads of commercial banks to get their insight on what an independent central bank will mean for Jamaica’s financial future.

Business Observer: What does the Bank of Jamaica’s independence mean for financial governance going forward in Jamaica and how do you expect it to improve the financial sector?

Nigel Holness – Managing director (MD) of FirstCaribbean International Bank (Jamaica) Limited:

Free from government or any political influence. The removal of Government’s ability to give directions on monetary policy engenders a greater sense of regulatory stability for financial institutions.

The central bank will be given a clear mandate from the Government and so will be held accountable for its actions and the results achieved.

The central bank will have independence of choice, being able to select from various policy tools to achieve their objectives. For example, managing the level of inflation against a backdrop of stimulating growth and employment, redistributing resources, etc.

Obviously the central bank will continue to manage and ensure a sound and stable financial system that’s focused on protecting the consumer at the same time ensure DTIs operate in a safe, efficient and innovative space — delivering products and services that enhance the market competitiveness. Independence should allow the banking supervisor to be able to construct and introduce new rules at a much faster pace within the framework provided under this new legislation.

The central bank of Jamaica currently enjoys a certain degree of confidence among the Jamaican people, with this reform and the central bank being independent will help to further strengthen confidence levels and build credibility over time. It is critical that they have a high degree of creditability as it correlates to stability and confidence. Targeting inflation is one of the main mandates of the central bank, independence helps to engender public confidence that inflation will remain relatively low and could stimulate greater interest in longer-term investment.

Finally, this reform will establish a greater degree of transparency which is always a positive in any developing market.

DonWehby – CEO of GraceKennedy Limited: GraceKennedy supports a central bank governance framework which is based on independence, accountability and transparency. This will be achieved through the recent amendments to the Bank of Jamaica Act which:

• clarify the BOJ’s primary objective to be price stability,

• will strengthen the institutional independence and accountability,

• put in place an effective board decision-making structure, and

• ensure the bank is adequately capitalised.

These changes will create a framework to strengthen the governance structure of the bank while securing its independence and modernisation in keeping with international best practices.

The clarification provided by the Act regarding the role of the Board of Directors for strategy, policy and oversight of the administration of the affairs of the bank is the foundation of a strong governance framework for the bank. The establishment of a monetary Policy Committee comprising independent members is a key accountability mechanism which will provide the checks and balances to ensure sound policy and strategy decisions are made by the bank to improve and strengthen the financial sector.

GraceKennedy believes that the independence of our central bank and its modernisation which are in line with the principles of international best practice will signal to the financial markets, investors and our own people that Jamaica is the place of choice to live, work, raise families and do business. It will set a level of confidence that our fiscal and monetary policies will be clear, fair and conducive to economic growth.