it looked as if interest rates and inflation in jamaica were moving closer to convergence with that of the rest of the caribbean as well, but this changed sharply in early 2003 and the convergence for which we hoped was abruptly dislodged. we need to get back to that situation where economic convergence is a likelihood. capital markets need it. conclusion not only do authorities need to deliberately target economic convergence we also need to build incentives into our operational frameworks and to reward desired outcomes. this calls for more specific recommendations and for even closer interaction between market participants and the authorities. it also underscores the need for cooperative mechanisms in building our markets. thank you ladies and gentlemen.

development of capital markets has been retarded partly because of the lack of an entrenched credit culture, and conversely, that a credit culture has not become entrenched because capital markets are not sufficiently developed. however, there is evidence of the formation of credit rating agencies in the region. these can be of assistance to investors who do not have the time or the training to conduct their own credit analyses. efforts by the central bank of barbados lastly, let me touch on the central bank of barbados ’ efforts with respect to capital market development. the bank has a close relationship with capital markets through its central banking operations. financial and capital markets serve as an important vehicle for transmitting monetary policy to economic agents. if the financial and capital markets do not function sufficiently, policy effects can be dampened. interest rate changes, for example, represent just one example of the importance of an efficient market in the effectiveness of policy as this change works itself through to lending costs and hence to competitiveness and to profits and to asset prices. in terms of new instruments the bank is at the forefront in developing new secondary mortgage market products to potential investors in the belief that capital markets require a wider range of products. it has also started a series of workshops with the objective of assisting in the development of new financial instruments. increasingly also, credit unions need to be more integrally involved in the process of financial development. at the regional level, governments need to include convergence of caribbean economies as an important goal in their national planning since greater convergence of caribbean economies is important for the development of a truly regional capital market. while there has been much progress on the ground in terms of cross border ownership changes, there is still a wide disparity in interest rates and inflation rates across the region. this is not a great deterrent for the growth of a regional equities market and for the cross trading of equities but it is not the most propitious environment for the development of a regional government securities market or for the cross - trading of government securities of a higher interest rate regime in the jurisdiction of a low interest rate regime. the opportunities for arbitrage are tremendous so it is desirable that there be greater convergence of regional economies as soon as possible. the country most out of line both in terms of exchange rates and interest rates is jamaica, as the interest rate and exchange rate regimes of most other countries in the region, perhaps with the additional exception of guyana, are much closer to convergence. indeed, in early 2003