Lights Out for the ECCU Economies? (Part 3)

Part 3: Key Players in a Bold and Ambitious Future

Over the last two weeks, we have been discussing the pandemic’s impact on the Eastern Caribbean Currency Union (ECCU) and how we might come out stronger on the other side if we were to shift our focus to growth spending as opposed to borrowing for stability. Harmonised financial and regulatory frameworks across the Union will improve ease of doing business and make it easier to attract and support the broad investments needed to make this strategy work. Let’s discuss the key players needed to make that happen.

We have made a great start to harmonisation with the existence of our Monetary Council and we are moving in the right direction of harmonised legislation with the Banking Act, Insurance Act, Money Services Business Act and Payment Systems Act. The Eastern Caribbean Central Bank (ECCCB) has played an active role in ensuring we achieve full financial integration across the ECCU and has taken an important step on the Regulatory end by spearheading the establishment of single regulatory units (FSUs) in each ECCU territory. In fact, I think it’s safe to say that financial integration has outpaced the ease of movement of goods and services and even people across the ECCU.

However there are critical players within Financial Sector which are outside of the ECCB’s regulatory oversight – a scenario that allows for gaps in mitigating risks. Our Credit Unions play a very important role here in the ECCU, some are even bigger than banks and that is not a bad thing. However the rapid growth of the sector might have outpaced the existing regulatory structure, introducing vulnerabilities. I have sad memories of the public fallout in Trinidad due to the demise of a couple credit unions which is not something we want here in the ECCU.

While I applaud the start that has been made, I encourage our public sector leaders to increase their focus on addressing our vulnerabilities towards continued stability and supporting the needed foundation for economic growth.

To begin, we are committed to working with the public sector in enacting the necessary reforms and enhancements needed to build a strong foundation for growth across the Union. But our support is also needed in every sector and at every level - Individual, Household, Community, Business and Government. The way we see it, our customers are our people, and if they fail, we fail.

We played our role well during the pandemic era by engaging our communities, especially our frontline workers and the most vulnerable, providing cashflow support to our customers and protecting the safety and well being of both customers and staff. But we would have a new role to play if the Union were to pursue a strategy of spending for growth. That role starts with action in support of the Region’s long term recovery including

• Debt restructuring
• Waivers
• Increased repayment options
• Loan consolidation coupled with financial management counselling
• Increased government lending (where possible)
• Special support for our SME sector

But it doesn’t end there. Beyond our support for recovery, we can also offer support for stimulating economic activity including:

• Flexibility in loan criteria
• Willingness to look at non-traditional business models including the high potential growth industries I noted in my earlier blog
• Supporting environmentally sustainable projects with focus on areas like the blue economy and renewable energy

Given the Republic Group’s philosophy of building successful societies, we are already moving towards this view of the future. We recently became a signatory to the Responsible Banking Initiative which promises to bring value to the territories in which we operate by allowing the Region to mobilise capital from new sustainable sources which also happen to be among the fastest growing segments of the international financial market.

I believe, without question, that with the right action the ECCU could be on the cusp of a bold and ambitious future. Our governments, regulators, banks and businesses all have a role to play in ensuring that we move forward not as countries, but as a Region so that we success to the benefit of all. To do so, we must first look beyond the trees of this era, to see the forest and the opportunity before us. And then we must be brave, let go of the truisms that have defined us until now and take control of our destiny. I can think of no better way for us to start the new year than on this new path. My team and I are ready to play our parts, are you?