`The long-enjoyed financial stability in the (Caribbean) region cannot be taken for granted.`
That`s the word from Paul Cashin, head of an International Monetary Fund staff mission to the Eastern Caribbean Currency Union countries. `Real GDP in the region is expected to contract by about 1 percent in 2009, with risks tilted to the downside,` he said Friday. `The ECCU’s high vulnerability to shocks, exacerbated by its elevated public debt level, highlights the importance of further enhancing crisis preparedness.`
Pointing to the collapse of CL Financial Holdings in Trinidad and Tobago and the scandal surrounding Stanford Group in Antigua and Barbuda, Cashin on Friday said the two recent issues `highlight the urgency to bring the non-bank financial sector (including offshore financial institutions) under effective regulation and supervision.`
`Moreover, waning economic growth after a period of rapid private credit expansion poses a major risk to the stability of banking system, through the deterioration of banks’ asset quality,` said Cashin. `It is, therefore, crucial to intensify oversight of banks and strengthen consolidated supervision of financial groups, particularly those that have domestic bank affiliates. The significance of foreign financial institutions in the ECCU also calls for strengthened cross-border regulatory cooperation and information sharing, which the ECCB has been pursuing.`
His comments come as the IMF Mission continues its visits to the members of the Eastern Caribbean Currency Union to conduct 2009 discussions on ECCU policies. The ECCU countries are Antigua and Barbuda, Grenada, St. Kitts and Nevis, St. Lucia, Dominica, St. Vincent & the Grenadines, Montserrat and Anguilla.
