ewart s williams : the future of the financial industry after the crisis opening address by mr ewart s williams, governor of the central bank of trinidad and tobago, at the 14th caribbean business executive seminar, caribbean centre for money and finance, port of spain, 30 april 2010. * * * let me first thank the caribbean centre for money and finance for inviting me to make a few opening remarks at this their 14th business executive seminar. given the ccmf ’ s mandate, the theme of your conference “ the future of the financial services industry after the crisis ” is most timely. let me also congratulate ccmf on assembling a most impressive cast of speakers, who could be expected to bring diverse perspectives and unique insights into how our financial sector is likely to evolve over the next few years. since the international financial crisis, governments and central banks in both developed and developing countries have been giving serious thought to the future of the financial services industries in their respective economies. in particular, a lively debate continues to rage on about the regulatory response to the crisis and on the measures needed to avoid a repetition. the causes of the financial crisis have been well - documented and analysed and i don ’ t plan to review that discussion here. suffice it to say that there is widespread agreement that the legacy of the crisis will be long - lasting with significant changes expected in the global financial landscape going forward. there is perhaps less consensus on what shape the new landscape will take. in respect of the advanced economies, where the crisis originated, and which suffered most from the ravages of the crisis, the good news is that the near - term outlook for the financial sector has improved significantly. in the united states ( us ), bank stocks have rallied and those of the four largest banks have been among the best performers in the s & p 500 since the market hit bottom in march 2009. this month, four of the largest financial institutions in the us, jp morgan chase, bank of america, citigroup and goldman sachs reported healthy first quarter earnings. despite these indicators, there continues to be serious risks to financial stability in these economies, arising from the withdrawal of government support, continued write - downs to compensate for further asset deterioration and funding pressures, as institutions seek to reduce leverage and raise capital and liquidity buffers. in these advanced economies, debate is still raging on the long term financial sector outlook. for example : the optimal size of financial institutions – many experts expect that

no compelling evidence of overheating in the property market. more importantly, commercial banks have maintained their mortgage lending standards, with still conservative loan - to - value and loan service - to - income ratios. on the external side, the demand for imports of goods and services has been quite robust, prompting the central bank to intervene deliberately in the foreign exchange market. in the first eleven months of 2013, the central bank sold us $ 1. 3 billion to authorized dealers compared with us $ 1. 7 billion one year ago. with the bank calibrating its sales of foreign exchange to address imbalances in the foreign exchange market, the level of gross official reserves rose to us $ 9. 3 billion at the end of november 2013. this represented more than 11 months ’ import cover. central bank monetary policy actions before i turn to the central bank ’ s monetary policy actions, i would like to reiterate the major changes made over the past year to the bank ’ s monetary policy decision making framework. these were as follows : • inclusion of two external members on the monetary policy committee, to ensure that the mpc benefits from specialized expertise and diverse viewpoints in its policymaking deliberations. • changing the mpc meeting frequency from once a month to every two months to give the mpc a better opportunity to fully consider economic and financial conditions, including important issues and policy alternatives ; and • communication of the bank ’ s monetary policy decisions, including the setting of the repo rate, to the public in the form of a “ monetary policy announcement ” on the friday evening of the week in which the mpc meeting is held. bis central bankers ’ speeches given the gradual pace of economic recovery and the stability of core inflation, the central bank has maintained a monetary stance geared towards supporting economic activity. this accommodative stance is reflected in the fact that the bank has maintained its policy rate, the repo rate, at a historical low of 2. 75 per cent for the past fifteen months. however, with liquidity levels in the banking system high, the central bank took actions to help curb the excess liquidity. over the first eleven months of 2013, commercial banks ’ excess reserves increased to a monthly average of $ 6. 1 billion, up from a monthly average of $ 3. 6 billion in the corresponding period of 2012. the main source of this liquidity is generated from the financing of the government ’ s net domestic budget deficit. these fiscal injections amounted to