brian wynter : the international monetary fund ’ s regional economic outlook opening remarks by mr brian wynter, governor of the bank of jamaica, at the launch of the international monetary fund ’ s regional economic outlook, kingston, 20 october 2010. * * * ladies and gentlemen, welcome to the bank of jamaica. we are especially glad to have our colleagues and partners from the international monetary fund – both resident, dr gene leon, and itinerant, mr gilbert terrier ( senior advisor in the western hemisphere department of the imf ) – and our fellow caribbean central banker, dr shelton nichols, deputy governor of the central bank of trinidad and tobago. i know that none of you are strangers to jamaica, personally or professionally, and i hope that you will find this visit pleasant and fulfilling. i am also happy to recognise the jamaican members of the panel who will speak later : the financial secretary, dr wesley hughes, mr keith collister, member of the economic policy committee of the private sector organisation of jamaica and dr damien king, head of the department of economics at the university of the west indies mona campus. many of you in the audience are accustomed to gather in this forum for a discussion of the quarterly developments in the jamaican economy and the role of the bank in the way forward. there will be some of that today but the point of view will be more panoramic and will cover the whole region, including central and south america. sufficient account will be taken of the jamaican situation to enable us to appreciate the context and the parallels across the region. for most of the last two years, policymakers around the world have focused their attention on attenuating the impact of the fallout in the global economy ; repairing the damage to financial infrastructure ; supporting those sectors and persons that were hit hardest ; and stimulating recovery as fast and as far as possible. the review of the outcomes in different countries will no doubt reveal that those with flexible or growing links to the new poles of growth fared much better than those without such links. here in jamaica, we did not experience the collapse of financial firms as many others did owing mainly to the reform and recapitalization of the sector that took place over the previous decade. neither did we undergo the sharp declines in housing and other asset prices that others did. jamaica, however, found itself in a position where it faced the prospect of a slow, uncertain path to economic recovery not only because of its own inertia and uncompetitive

, which is equally, if not more, controversial. i am referring to the proposal to introduce a deposit insurance scheme ( “ dis ” ) in hong kong. in a sense, this can be seen as the other side of the coin to deregulation. increased competition in a deregulated environment may give rise to increased risk and therefore it seems right that we should look again at the arrangements for dealing with banking failure, should it occur. let me hasten to add that we have no reason to believe that such a failure will occur. the banking system in hong kong remains profitable and robust, despite the challenges that it faces. our system of banking supervision is also generally reckoned to be effective. but banks can still get into difficulties because of risks that supervision may not be able eliminate. there is always the possibility of external shocks or unfounded rumours that may damage confidence in a bank. deposit insurance, like other forms of insurance, is there to deal with low probability events that have a major impact if they occur. to make an obvious analogy, you still take out fire insurance even if you do not expect your house to burn down. hong kong stands out as one of the few developed banking centres which does not have a dis. there is of course no reason why we should follow the rest of the world just for the sake of it. but we should at least keep our safety net arrangements under regular review to ensure that they are still appropriate to changing market circumstances. this is what we did last year when we engaged an external consultant to consider whether the existing deposit protection arrangements in hong kong were sufficient, and if not how they should be changed. the conclusion was that an explicit and limited form of deposit insurance should be introduced. we subsequently undertook a public consultation on this proposition and on the detailed design features of the proposed scheme. this consultation generated a heated, albeit civilised, debate. not surprisingly, some of the large banks vehemently opposed the scheme. opinion in the community as a whole was however generally supportive. in particular, the legislative council passed a motion by a wide margin urging the government “ expeditiously to implement a dis, which is cost effective and easy for depositors to understand, for effectively protecting small depositors, and to formulate appropriate complementary measures aimed at reducing the risk of moral hazard. ” the hkma has studied the responses received during the consultation and has submitted a report to the government on the outcome. we are seeking a decision in