account is. however, the restructuring of the productive sectors to make them more competitive is another major challenge facing the country going into the csme, and it requires a combined effort. with judicious action at the policy - making level, and with the support and input of the public sector, these challenges can be met. on balance, the csme can produce net benefits to the barbadian economy by providing a harmonised framework for policy formulation, as well as a larger market, with greater opportunities for employment, investment, production and trade. one that will provide barbados with the economic and bargaining power necessary to combat external threats and overcome resource constraints. however, what ’ s in store will, to a large extent, depend on our willingness to seize the opportunities presented to us. we can chart our future in csme – not one sector or group alone – but with every group, sector and organisation determining what it wants and setting out to get there. what is in store for us in caricom will be largely determined by the efforts we make and by the initiatives we take to influence the outcomes we want.

health of the financial system, and put in place any measures that may from time to time be necessary to address any elevated risks to the system, whether from internal sources or from abroad. each year a financial stability report is published, reporting on the health of the system, with an update at mid - year. today we share with you the report of our mid - year assessment. we are well aware that there are ways in which our financial system needs to be improved. we have never had a perfectly competitive financial system, and if we are realistic we will admit that our financial sector is too small to attract many players. we should think of other ways to encourage higher levels of service and efficiency on the part of financial institutions. as you know, individual savers do not do very well at commercial banks, earning 2. 5 percent on savings only because the central bank stipulates that minimum. it is no secret that banks are unhappy that there is a minimum at all. i am suggesting to individuals that, for all their rainy day savings, they consider government savings bonds instead. savings bonds are just as convenient as savings deposits, because you buy them at commercial banks, and they are just as liquid as savings deposits, because you can cash them in at any time. however, if bis central bankers ’ speeches you hold them for the full five years of their maturity you earn an interest rate in the region of 5 percent, compounded over 5 years. one area which our financial sector does not serve very well is the financing of innovation and of small and medium enterprises. this is an area of exceptionally high risk, into which conventional financial institutions no longer have any incentive to enter. the stipulations for reserves and provisions against possible loss are now so stringent that even small portfolio allocations for high risk high return propositions may no longer be viable. conventional institutions, even insurance companies and others with a long horizon, may not be the best sources of funds for smes in their initial years. new firms should start with equity funding, so as to avoid debt service obligations during the formative period of the enterprise, before it has a regular clientele and a dependable cash flow. some new firms have been successful in finding equity, in spite of the absence of an organised market for venture capital in barbados, and some capital has been provided, over the years, by ngos and others. we need to continue the search for better arrangements for equity funding of new ventures. there are issues which