arrangements. the key to these arrangements would be the creation of more representative, but efficient and effective processes, which would lower the cost and increase the productivity of the state. one of the objectives of the economic union arrangements is to establish a state structure across an entire geographic area which would become, as set out in the treaty and its protocol, a single financial and economic space. an important achievement in this regard would be to arrive at a balanced allocation of time spent on regional and national matters, as this has been one of the main impediments to the advancement and success of integration in the region. this will involve time management and agenda setting at both the national and regional levels. one of the critical factors in creating the governance arrangements is that there is effective political responsibility for regional matters and that there are political incentives to ensure that the authorities are fully engaged. bis central bankers ’ speeches having established a single space, the combined goals of the space must be ascertained by public discussion and consensus, hence the importance of the regional legislature. within the treaty, the goals of growth, competitiveness and socio economic transformation have been outlined, which then allows for the application of policies across the space to achieve these goals. at present monetary policy is a regional matter and the executing agency is the central bank. this has been a major instrument in securing the stability of the financial sector and has been defined in the new treaty as an “ institution ” of the oecs. fiscal policy has been a national policy tool but, at a special meeting of the monetary council in grenada this year, it was agreed that there should be effective coordination of this instrument. trade policy and international relations policy would be appropriately coordinated at the national and regional levels. this process has to be vigorously driven by three fundamental programmes, namely • public sector modernization at the national and regional levels • private sector development, and • financial sector development the integration model, as characterized by the original treaty of basseterre, has worked for the oecs region but it is also fair to say that it has not been fully exploited. the new treaty, which is at a higher level of the integration process, has great potential to deliver, but the political economy of the oecs has to be carefully examined and understood to ensure its successful implementation. the economic union provides the political space and the economic environment to treat with one of the fundamental structural issues that has dogged the oecs countries throughout their economic history and marred their relations with the other

the role of public sector unions is of critical importance, as it is necessary that they buy into the creation of such a state. in short the modernization of the state has to be one of the highest priorities of the political authorities. the modernization of the state and the development of the real and financial sectors will be the complement of a three - prong strategy and programme which can be outlined as follows : i. an externally financed stimulus package synchronized with four critical safety net programmes to address the structural vulnerabilities of the countries. these safety nets would be : • a financial sector safety net • a fiscal safety net • an environmental safety net • a social safety net. ii. an industrial policy that targets a lead transformational sector in which the region has a comparative advantage that can be turned into a competitive advantage. iii. a number of overarching and interlocking national and regional projects which will facilitate the modernization process. dubbed the great modernization projects, we have identified seven of them, namely, transportation, energy, environment, ict, education and skills training, research and development and governance. in conclusion one can only affirm that these are very challenging times. the international economy can be characterized as being fraught with danger as there continues to be great uncertainty and volatility. on the other hand these circumstances have presented us with a once in a life time opportunity to restructure our economies, polities, and societies. i end with a quotation which sums up my feelings on these matters “ we believe it is a necessity of our times to translate our beliefs, our hopes and ideals into concrete action ”. thank you bis central bankers ’ speeches