delisle worrell : the economic and financial system in barbados welcome remarks by dr delisle worrell, governor of the central bank of barbados, at the domestic financial institutions conference, bridgetown, 20 september 2012. * * * the time we spend together here today is an opportunity to reflect on the nature and effects of financial transactions in our economy, in an effort to better understand how the financial system works. we do well always to remember how imperfect is our understanding of the economic and financial system. in economics, as in many other areas of life, we often speak as though we are sure of the consequences of this or that policy, when in fact there are so many factors at work in every case that the outcome is always uncertain. that is why, from time to time, it is essential that we step back from the action and examine in some depth how things have turned out, and what that tells us about how things work. it is important that the central bank and the financial services commission, the regulators, do this in collaboration with you, the private financial institutions. the economy works to our benefit only when all actors, the central bank, government, financial institutions, firms and households all share an understanding of how the actions of each affects the others and the economy as a whole. a great strength of the barbadian economy, and one which we should celebrate, is the quality of the institutions which inform the discussion of our economy. our social partnership is celebrated around the world, and we need to pay tribute to the quality and comprehensiveness of our media ’ s coverage of economic issues. today ’ s conference is a contribution to the study and discussion of our financial system, so that we can improve the way it works, in the interests of our national development. our agenda today includes an update on the stability of our financial system, which we continue to monitor closely. in january we published a comprehensive report on the financial system, and we published an update in july. our system is sound and our major institutions have adequate capital and reserves, but we continue to see the adverse effects of the prolonged recession on credit quality. the process of resolving the clico insolvency is on - going, managed by the judicial managers, under the supervision of the courts. other insurance companies are profitable. our financial services commission is now into its second year, and there have been changes of substance in the regulation of nonbanks. the financial system as a whole, banks, other

. the proportion of the financially excluded on the other hand has been falling steadily from 39. 3 % in 2006 to 31. 4 % in 2009 and now stands at 25. 4 % of the adult population. equally and more striking, the proportion of the population using informed financial services has declined to 7. 8 % from 35. 2 % in 2006 and 26. 8 % in 2009. these findings demonstrate impressive achievements and vindicate policy strategies and reforms undertaken by government and initiatives and innovations by the financial sector players ’ as having helped expand financial inclusion. it is even more interesting to note from the results that many more people are now accessing and using financial services and products supplied by diverse providers. this shows that people are now moving towards using a broader portfolio of financial services and products to satisfy their needs. the use of combinations of all formal prudential, formal non - prudential, other formal and informal financial services except the excluded has been rising from 16 % in 2006 to 25 % in 2009 and to 29 % in 2013. these patterns demonstrate that financial sector participants require choices and therefore the need to maintain diversity and encourage competition amongst providers of the different financial products in different market segments. ladies and gentlemen : the survey results we are releasing today are as a result of developments in the wider economy, policy and regulatory reforms, increased competition and innovation and advances in information and communication technology. these developments have set off a dramatic shift away from the traditional delivery of financial services. in the banking industry, the introduction of automatic teller machines ( atm ) a few years ago already moved customers out of the physical branches. and now more than ever, access through point - of - sale ( pos ) devices, the internet and mostly through mobile phones platforms have accelerated and are still poised to accelerate the swing to branchless banking. we, however, still have some ground to cover in expanding access to financial services, given that about 25 % of the population remains totally excluded. bis central bankers ’ speeches ladies and gentlemen : the information generated by the past three finaccess surveys will help financial service providers identify where opportunities exist. i am delighted that the sector now has such useful information resource at its disposal. in conclusion, ladies and gentlemen, let me also observe that the finaccess studies have been championed and driven by a partnership between public and private institutions. i commend and support such initiatives and hope that this lays the foundation for a deeper and sustained partnership between the public and private sector in