and jurisdictions to international financial standards, including the identification of non - cooperative jurisdictions. the fsb indicated its interest in assisting these jurisdictions to improve their compliance and waived the threat of sanctions for non - cooperating jurisdictions. the initial focus of the initiative ( particularly for developing countries ) was on adherence to international cooperation and information exchange standards in the financial regulatory and supervisory area. the rationale was that financial markets are global in scope and that weakness in cooperation and information exchange presented risks to the global financial system. there is a considerable lack of clarity as to how the fsb and its partner institutions are expected to operate in relation to the small, developing economies including those in the region. this ignorance has given rise to a high degree of suspicion as to motives and as to whether the mandate of these institutions is consistent with the developmental aspirations of our small caribbean economies. there is a perception that the g20 is seeking to implement its reform agenda in a nondiscriminatory manner, with all jurisdictions – large or small – being asked to adopt broad, common standards. there is also the perception that failure to implement this agenda in the manner and at the speed determined by the standard - setters, could lead to marginalization. the reality is, however, that the pursuit of an exogenous agenda that lacks national “ buy - in ” could present serious challenges for the small caribbean economies that have fragile domestic financial systems and are short on implementation capacity. regional policy - makers, in particular, are concerned about the impact that the new reform agenda is having on their offshore financial centers, which are an important element of their diversification strategy. they see the new information - sharing requirements as being bis central bankers ’ speeches onerous and leading to a migration of business to other centers in europe and asia. in the absence of compensatory mechanisms, the complete elimination of these offshore centers could have a heavy toll on income and activity in the domestic economy. i noted earlier that the reforms being proposed by the standard - setters were largely targeted to the advanced countries. while the caribbean did not suffer serious direct effects from the international financial crisis, the subsequent collapse of the cl financial conglomerate and the recent failure of a few banks in the oecs should be a stark reminder of the weakness of our regional regulatory systems. several of our countries have been taking steps, on an individual basis, to upgrade their regulatory structures. however, as a region we have been slow to adopt an agreed reform agenda. perhaps this lack

single monetary policy for the entire region. the importance of the convergence criteria is another area that has attracted much scrutiny and analysis. as you know, the criteria sets limits for the level of inflation, the fiscal deficit, the variability of the exchange rate, and a floor on the level of foreign exchange reserves. the rationale for the criteria is that a higher level of convergence facilitates the conduct of common macroeconomic policies and obviates the need for special measures to correct imbalances in individual economies. let ’ s examine these two issues. in my view, the diversity in regional production structures is not wide enough to present unmanageable challenges. at any rate, problems of asymmetric shocks could be addressed by capital market mobility and by fiscal cross - border transfers. in fact, the region ’ s approach to the establishment of the single economy is to exploit the sizable complementarity that exists to facilitate the integrated development of the main production sectors. the issue of the convergence criteria is a bit more complicated. [ incidentally, i would like to congratulate the ccms for the very good work the institution has done for the last few years in monitoring the convergence criteria ]. having said this, however it is a fact that convergence criteria are only meaningful if they serve as an anchor for each country ’ s macroeconomic policies and as a disciplining device. to the best of my knowledge, there isn ’ t any case in the region where a country ’ s annual budget or its medium - term development recognizes or is specifically guided by the need to meet the convergence criteria. this is much unlike the case of the eu where an institution with political clout - the european monetary institute ( forerunner to the european central bank ) - was designated to monitor the convergence criteria, where these were seen as serious performance targets and where countries were expected to tailor their economic policies to ensure that the criteria were met. in our case, the convergence criteria are only informational ; they are not a guide to policy ; they carry no sanction, not even peer pressure. challenges the ineffectiveness of the convergence exercise underscores one of the principal challenges facing the region on the road to monetary union. this challenge has to do with the willingness of regional governments to transfer authority to regional institutions. perhaps the biggest challenge in this regard will be a decision to yield sovereignty over monetary policy to a regional central bank. the indifferent record of implementation of caricom decisions, combined with a less than robust approach to an