offers faster prospects of internationalization. caribbean economies have realized that they can accelerate development of their services sector even before the manufacturing sector matures. this is certainly the case with some international financial centres ( usually termed “ offshore centres ” ) whose manufacturing sectors had not yet reached the levels of sophistication of many developed countries, but whose services sectors have grown exponentially. barbados, bahamas, bermuda and cayman are well - known examples. support services are very critical to the development of the services sector in the caribbean. business services, telecommunications, information technology and computer based services influence the ability of many service economies to deliver cross border services and are critical to the building of a vibrant international services sector. we are happy to say that the caribbean is beginning to benefit from the liberalization of the telecommunications sector and the results are already obvious in terms of lower operational costs of business. we have also observed that in the current global environment, there is a clear shift away from physical product - based wealth accumulation to knowledge - based wealth accumulation. professionals with the flexibility to adapt to the changing environment can provide the catalyst needed to propel the caribbean to higher sustainable growth paths. at the same time, growth of our services sector has the potential for greater employment because of the labour - intensive nature of service activities and offers the possibility for small - scale operations to expand rapidly by drawing on the potential linkages with the other sectors of the economy and with the rest of the world. electronic commerce is also providing opportunities for caribbean companies, since it does not recognize size as a constraint. it allows service providers in the region to offer services in foreign jurisdictions with greater ease, though admittedly, it also permits foreign professionals to offer services in the region as well. this means that local providers have to step up their game, since technology has already outpaced the ability to protect domestic service providers and is forcing the internationalization of service markets. in fact, services are becoming the most traded item on the internet. this mode of service delivery while giving developing countries like the caribbean an advantage, will not be a give away since it does not take the competition away. because of the traditional perception that developed countries do it better, the quality of services provided by the caribbean will need to be superior to that provided by develop country operators. this will require a massive investment in education and training by our universities, colleges and corporations, since many professional services allow for provision without a presence there are possibilities for expansion in overseas markets at low costs. no

##ructural development though efforts have been intensified towards developing a more diversified financial system, responses in some areas have been lukewarm. small enterprises continue to have difficulty in accessing funds on appropriate terms, and venture capital funds have been limited. so that there are still market segments that are unsatisfied. investors in the stock market continue to buy and hold, and trading in government securities is very limited, so that instruments continue to lack the needed level of liquidity. however, competition has resulted in improvements in the turnaround time in processing loans, and in most instances, the response time in resolving customer problems. credit growth has rebounded strongly in 2004 and retail lending for consumption generally has increased. indeed, the banking industry has continued to benefit from strong demand for consumer credit to the detriment of the foreign exchange reserves. but there remains a greater need for institutions to develop more avenues to assist productive sectors. in this regard, not much has changed. a change in the mode of financial regulation given the importance of maintaining public confidence and trust in the financial system, regulation and supervision continue to be vital components of a well - developed financial system. the central bank continued to balance carefully the objective of promoting efficiency in the banking system, and maintaining financial stability, conscious that while competition and innovation are always important stability of the financial system remains of paramount importance. opportunities from regional integration with the imminent implementation of csme, large businesses and corporations have begun to review their business architecture more aggressively, and have moved to relocate business operations and to operate subsidiary operations in new locations - some of them non - english speaking. this has been accompanied by new ways of organising production, sale and marketing within the region. the caricom region offers a market of approximately 6 million people ( excluding haiti ). opportunities therefore exist for financial institutions to support regional business and investors who are venturing into new activities. the role of banking institutions also needs to extend beyond the traditional one of financier, to one of manager of financial relationships. strategic alliances have been growing, and have tended to enhance commercial banks ’ capacity to compete in both the domestic and external markets, and thus has enabled them to position themselves to capture the opportunities afforded by liberalisation and globalisation, both within a wider caricom and outside it. customer - focused finance however, there are areas where more attention needs to be paid. one such area is the need to commit more resources to microfinancing. while institutional arrangements are being put