DeLisle Worrell: The initiative of the Financial Stability Board on
"noncooperative jurisdictions" from a Caribbean perspective
Remarks by Dr DeLisle Worrell, Governor of the Central Bank of Barbados, on behalf of the
Caribbean Group at Breakfast with the Managing Director of the International Monetary Fund
(IMF), Washington DC, 10 October 2010.
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The international business and financial sector is vital to Caribbean growth
The international business and financial sector (IBFS) plays a key role in the strategies for
diversifying the sources of growth for the small countries of the Caribbean. These countries
are all very open and dependent on foreign-exchange earnings as the engine of growth and
employment. Already the IBFS is the principal source of foreign exchange and growth for the
smallest countries, and for others it is second in importance only to tourism. Yet other
Caribbean countries look to the sector as a potential source of diversification.
All Caribbean jurisdictions ground their IBFS sectors on their competitive advantages of
geographical location, environmental appeal, a superior quality of life, a relatively stable
economic and political environment, and a highly skilled labour force. In addition, well
established Caribbean jurisdictions like The Bahamas and Barbados now boast a strong
infrastructure of professional and technical skills, in law, accounting, finance and related
disciplines, and can provide those services to international financial institutions at highly
competitive prices.
Furthermore, the Caribbean is dedicated to the business of high quality institutions operating
through fully legitimate channels and in accordance with the best international standards and
practices. In order to guarantee the quality of our international financial services Caribbean
jurisdictions have been fully involved for the past decade in the Financial Sector Assessment
Programs (FSAP) and Reviews of Standards and Codes (ROSCs), conducted by the IMF
and World Bank, and actively participate in the work of the Financial Action Task Force
(FATF) and the Caribbean regional body CFATF. There are published reports on these
reviews available for all jurisdictions.
As is inevitably the case, there are, in every case, areas where financial regulation needs to
be upgraded and legislation and guidelines need to be revised. There is universal
commitment to address the issues identified, as swiftly as resources and skills permit. In this
effort the Caribbean benefits from technical assistance from the Caribbean Regional
Technical Assistance Centre (CARTAC), the IMF, the Association of Supervisors of Banks of
the Americas (ASBA) and financial supervisory agencies of the US, Canada, the UK and
others.
The Caribbean welcomes any further assistance which the international community might
offer.
The Caribbean welcomes offers of additional assistance in the upgrading of financial
surveillance. In particular, we are concerned about the inadequacy of data on regional and
international linkages and cross border risk exposures. This is an issue of vital importance for
domestic financial stability in the Caribbean region, as well as for the stability of the region's
international financial business. In this connection we would be glad to be involved with the
joint initiative of the IMF and the Financial Stability Board (FSB) on "The financial crisis and
information gaps", which speaks to these issues.
However, the FSB's "non-cooperative jurisdictions" initiative is puzzling and unhelpful.
Caribbean jurisdictions were in no way implicated in the recent international financial crisis,
and there were no failures in IBFS sectors in Caribbean jurisdictions. Since the FSB's
mandate is international financial stability, its selection process, which has placed some
Caribbean jurisdictions on its priority list, appears to be flawed.
The Caribbean jurisdictions are fully involved in the FSAP and ROSC processes, and are
adequately served by technical assistance. The FSB appears to be questioning the
assessments published in the Financial System Stability Assessments for Caribbean
countries. Moreover, the FSB has not published the criteria by which it will supercede the
judgment of FSAP teams, reflected in the published FSSAs. In any case, what is required in
order to strengthen financial surveillance is improved data and methodologies, not an
additional review of information which will already be out of date. Furthermore, it is unclear
that the FSB has the technical capacity to render a balanced and informed judgment on the
adequacy of financial systems.
The fact that the FSB contemplates declaring as "non-cooperative" countries which are fully
involved with the FSAP and FATF processes, if taken at face value, implies a totally
unjustified lack of confidence in the FSAP process. The FSAP was developed on the basis of
intensive research and analysis, and the tools, techniques and processes of the FSAP
continue to be refined, in particular to incorporate the lessons of the international financial
crisis. The FSB appears to discount this considerable intellectual investment, without
providing an adequate substitute. In short, the FSB "non-cooperative jurisdictions initiative"
lacks transparency, legitimacy, intellectual integrity and justification. Rather than contribute to
strengthening international financial stability it represents a disincentive for international
financial cooperation and the development of a level playing field in international financial
transactions, and it is therefore a threat to international financial stability.
The Caribbean is requesting that the IMF, through its membership of the FSB, insist that the
FSB refocus its engagement with the Caribbean to concentrate on issues where the FSB can
reinforce the efforts which the Caribbean has been engaged in for many years, to upgrade
and maintain surveillance of domestic and international financial sectors which offer
international financial services of the highest quality and integrity. These activities are
undertaken with the assistance of and in collaboration with the IMF, the World Bank and
other international institutions, and the FSB should support already established processes. In
this connection, the Caribbean identifies the statistical data gaps as a priority for attention.