those in the dominican republic and cancun, for example. instead we must exploit and develop barbados'reputation and appeal to the discriminating tourist who will pay a higher price for a more rewarding experience. we must become more adept in demonstrating that potential investments in upmarket projects are eminently profitable, and we must focus our competitive initiatives on countries and areas which serve the traveller who treasures an exceptional vacation experience. the financing of small business presents special challenges in all economies, not just in barbados, for reasons that have been aired extensively, and are familiar to all of us. barbados has borrowed from experiences in the uk and other advanced economies over many years, to establish a variety of funds and support schemes for small business. however, we could unquestionably do a much better job of coordinating services for small business, and channelling finance and support services in ways that are most helpful to each type of activity. capital markets have not proven to be particularly useful for small open economies, and very little investment in barbados has been funded by new issues of stock, over the life of the barbados securities exchange. it has to be admitted that an exchange with as little daily activity as characterises our own, has little potential to contribute to investment in producing goods and services. all that i have said so far paints a relatively benign picture of the efficiency of the financial services sector, in meeting the needs of barbadians. however, availability of finance remains number two in obstacles to doing business in barbados, in the world bank ’ s global competitiveness index. the reason may be that the sources of available finance do not cover innovation. it is the businesses which aim to break new ground which have difficulty in sourcing finance on terms which they can afford. what such firms need is equity finance, funds from sources which will not expect an immediate return, and can wait until the project becomes profitable. we should give some thought to this problem. it may be argued that there is an adequate supply of funds from sources that are prepared to take the long view, foregoing near - term returns on their investments in exchange for a higher yield over the life of the investment. insurance and pension funds, for example, may wish to allocate a portion of their portfolio in this way. what they may lack is an appropriate vehicle for channelling those funds in the direction of innovators. the stock exchange does not provide such a platform, because innovating firms will not have a track record of success

delisle worrell : our financial system – fit for purpose? address by dr delisle worrell, governor of the central bank of barbados, to the barbados association of insurance and financial advisors, bridgetown, 26 april 2013. * * * how well does our financial system suit barbados ’ needs? in my address this morning i will examine how the system serves the needs of households and of businesses, and attempt to identify any gaps that should be attended to. i begin by discussing financial services for households. the main items of household credit are mortgages, and the financing of consumer durables. households and individuals are well served by banks, credit unions and finance companies, in the provision of financing of housing, durable consumption goods and amenities. adequate availability of this household finance, on affordable terms, significantly enhances the well - being of the population, which has the benefit of the goods over the period when they are repaying their loans. in an earlier period, before mortgages and consumer credit were widely available, consumers were deprived of the use of goods while they accumulated the funds for cash purchases. individuals and households are not as well served when it comes to alternatives for investing their savings. commercial banks offer poor returns on deposits, invariably below the rate of inflation ; the purchasing power of monies left on deposit at a bank is eroded over time. government paper is the most remunerative financial investment available to individuals. for those with gratuities and large amounts on which they need to earn interest, longer term securities are the best yielding. for those investing funds set aside for contingencies, savings bonds are the best bet. if held to their full term savings bonds carry an interest rate which keeps pace with inflation, and the bonds may be cashed in at any time if needed, albeit with an interest penalty. credit union shares and deposits at credit unions offer somewhat better returns than at banks, but deposits at credit unions are not yet insured, unlike bank deposits, which are protected up to a value of $ 25, 000. retirement income is vulnerable to inflation the financial system does not serve the needs of retirees very well because pensions are not adjusted in line with inflation in the typical domestic scheme. in less than a decade after retirement the average pensioner is unable to maintain his or her standard of living at retirement, purely because of the ravages of inflation, unless they have supplementary income. recent legislation mandating an inflation adjustment is a step in the right direction