delisle worrell : changes impacting barbados ’ competitive market position remarks by dr delisle worrell, governor of the central bank of barbados, at the opening of the international business and financial sector conference, bridgetown, 15 march 2012. * * * this conference takes place at an extremely challenging time for the international business and financial sector ( ibfs ). in addition to the adverse effects of ongoing global uncertainty, we have to cope with swiftly changing international regulatory guidance, and with changes in law and practices abroad that may affect barbados ’ competitive position in the market. we have had to confront major changes in the ibfs sector before, and we will overcome them on this occasion, just as we have done in the past. to achieve this, we must be proactive, both in the public and private sectors. we are already embarked on the process of strengthening our framework of regulation of the financial sector, to ensure that it stays abreast of the most current guidance and best practices. the central bank is coordinating an exercise which will lead to a comprehensive review, via an imf / world bank financial sector assessment programme ( fsap ), to be conducted next year. we, the regulators, will work together with you to ensure that the fsap certifies us as being on par with the foremost international financial centres worldwide. this year is devoted to perfecting our systems and legislation, so that we can do our own selfassessment. as always, any changes will be fully ventilated and discussed with you. some of you will have participated in previous fsaps, and you know that when the assessment teams come to visit, they will interview a sample of financial institutions, to have your views. please communicate with us now on things that we need to address, so that next year you will be able to affirm that we are up to best international standards in every way. it is vital that we track all aspects of international developments affecting the ibfs sector. to this end, the central bank last month launched a quarterly electronic newsletter, available on our website. i urge you to take a look, if you have not done so already, and to look out for forthcoming issues in may, august and november. the newsletter aims to facilitate networking, and we welcome your contributions and reactions to the material. the february issue deals with caribbean involvement with the financial stability board, the body overseeing international financial reform ; the financial action task force on anti money laundering (

by more than 7 percentage points ( relative to gdp ) between 2008 and 2012. in spain the current account has improved even more substantially. also, we have seen reductions in unit labour costs. ireland has seen an 18 percentage point improvement relative to the euro area average. in greece, portugal and spain the improvement has been about 10 percentage points. as i have recently stressed to the euro area heads of state and governments, narrowing the gap between wage and productivity growth is absolutely essential for improving competitiveness in euro area countries. 4 to conclusively address the root causes of the crisis these efforts need to be maintained and, in some countries, stepped up. in the meantime, however, what i referred to earlier as the symptoms of the crisis also need to be tackled. fiscal positions need to be maintained on a sustainable path and balance sheet weaknesses in the banking sector need to be repaired. and let me be clear : undertaking structural reforms, budget consolidation and restoring bank balance sheet health is neither the responsibility nor the mandate of monetary policy. monetary policy can only avert an abrupt deleveraging that would have been conducted in an environment of panic and fire sales. and this is what we have done in order to avoid deflationary downward spirals that would have prevented us from delivering on our mandate of preserving price stability in the euro area. monetary policy can support the reform progress by safeguarding price stability and anchoring inflation expectations. but it cannot substitute for actions that other actors, including the private sector itself, must take. completing the euro area ’ s institutional architecture in addition to the role of misguided or imprudent national policies, the narrative of the crisis that i have just spelled out clearly points to some serious shortcomings in the institutional architecture of the euro area. to begin with, the only policy sphere where some form of supra - national surveillance was in place was fiscal policy. and even in this domain, the mechanisms that were envisaged to prevent and correct unsustainable fiscal performance by member states proved to be lacking. no framework was foreseen for monitoring competitiveness and heterogeneity within the euro area and for enforcing corrective action when needed. what ’ s more, in interconnected financial systems an entirely national perspective on bank regulation and supervision turned out to be insufficient. finally, no crisis management framework had been set up to complement the national shock absorption capacity of euro area countries. the creation of the efsf and more recently the esm