is all about. and what are the downside risks? well, even if order is quickly restored to the us financial system, with the approval of the $ 700 billion package, the consensus is that the global economy is scheduled to undergo a pronounced slowdown ( some are using the r word … recession ). if this occurs, the reduction could prompt a fall in international oil and energy prices. under these circumstances, something will have to give ; either a reduction in expenditure or a reduction in savings through the hsf, which strictly speaking, is permitted under the hsf act. either option has unpalatable consequences. trinidad and tobago is in a better position to withstand a global slowdown than our caricom neighbors, who have already begun to experience declines in tourist arrivals and in migrants ’ remittances. if this goes beyond a certain level, our manufacturing sector which contributes us $ 1 billion in exports, but provides substantial employment, could be affected. these are just two examples. there is no doubt that compared to the 1980s, we are in a better position now to withstand a global down - turn. but borrowing from the current lexicon, we have by no means de - coupled and a global slowdown could present a new set of challenges and at least slow our advance to our 20 / 20 vision. but ladies and gentlemen, “ god is a trini ” and these risks may not materialize. even if we are inclined to take this view, we should see in the current global financial crisis, an opportunity to further strengthen our economic fundamentals most notable by reducing inflation, increasing productivity and accelerating the diversification of our non - energy sector. that is the surest way of ensuring self - sustaining growth and improvements in the quality of life for our population.

banks, the deleveraging process is undergoing under the pressure of the deteriorating loan quality. credit is made scarce as banks have become risk averse and hesitate to lend to potential borrowers by tightening lending terms. hence, real sector agents, particularly firms operating in ailing sectors of the economy, are facing surmounting short - term financing difficulties and have lost sight of their future objectives. the process of restructuring in these firms has to find ways for their business to change and become efficient, in order to survive and restart growth. finance and knowhow is particularly important during such restructuring phase. what role has the financial system in this process? we have to be clear on two issues : we have constructed a financial system and pursued a financial integration strategy based on banks. in fact, they comprise more than 90 % of the financial system throughout the region. we think this model is successful and with some minor revisions should serve our economies bis central bankers ’ speeches in the future. for one, foreign banks bring expertise and mostly stability to the financial system. but, recent experience has softened this argument. ( 2 ) banks should be the main vehicle of financial inflow. as converging economies see is expected to run current account deficits. as such, it is a capital hungry region which international banks should intermediate. a new business model relying purely on domestically generated deposits is a wrong answer to the previous extreme of huge capital inflows. a more happy medium should be sought, one based on careful and sustainable inflow of funds. how is the single supervisory mechanism going to affect the work of the central banks in the region? i believe the ssm mechanism is going to have a positive impact on central bank ( and regulatory authorities ) in the region discharging their responsibilities with regard to supervision and macro - prudential policies. regulators in the region will now talk to a single “ home ” supervisor, and this is expected to bring more attention to their supervisory concerns. this process could be strengthened further if the central banks in the region improve their own cooperation and are able to identify common position in their communication with the european central bank. this could address better the concern that the single supervisor could be more distant to worries of regulators coming from small countries in the region. being able to cooperate with a single “ home ” supervisor, will be instrumental in achieving faster progress in the process of regulatory convergence, and establish a more level playing field for financial institutions in the region. this is something that is being closely