bahamian financial resilience post - natural disasters john rolle governor * * as prepared for delivery. exuma business outlook sandals resort, exuma, bahamas 24th october 2019 introduction it is always a pleasure to speak at the exuma business outlook. this is happening at a time of incredible change within our economy. we are paying more attention to the immediate and long - term needs for planning and development around financial and economic resiliency ; and on leveling the playing field of access for commercial goods and services. post - hurricane dorian we are now more focused on strategies for financial resiliency for households, businesses and the public sector ; and we are preoccupied with business continuity and recovery at the national level for critical financial services. the take away from my presentation is that alongside the interventions which the central bank intends to make to increase the preparedness of the banking and payments system, serious interventions will also be needed from a policy and cultural perspective to tackle the household sector ’ s financial vulnerability. critical evolution is also required in our tourism product model to make this leading foreign exchange earner more resilient. the central bank will continue to take a progressive approach to identifying and promoting legal and regulatory reforms to accommodate financial sector transformation in the direction of greater resilience. general impact of natural disasters for the better part of the last two decades, the bahamas has been experiencing the direct impacts of climate change, particularly as it relates to the passage of tropical cyclones ( hurricanes ). they have increased in both frequency and intensity. since 1999, there have been at least eleven named storms that had a notable impact on some part of the archipelago. these storms have had the foreseeable impact of disrupting economic activity in both the immediate and medium - term, as shown in reduced output, rise in unemployment ; and in placing great strain on government ’ s finances. 1 before dorian, hurricane matthew ( 2016 ) exacted most recent high toll, even posing an obstacle to the government ’ s then articulated medium - term fiscal consolidation plan. the impact from hurricane dorian is projected to be greater than matthew ’ s. in the monetary and financial sector, setbacks include the disruption in banking and payment services ; and a potential deterioration in banks ’ credit quality indicators as borrowers in the impacted zones encounter a lengthy period of reduced or eliminated incomes. policy responses & preliminary estimates of the impact of hurricane dorian on the banking sector immediately following the storm, the central bank – consistent with actions taken after other severe encounters – relaxed lending guidelines

dollarise to eliminate currency volatility concerns, then fiscal and private sector savings will remain important to provide the buffers needed to make our economy resilient. dollarisation will not provide a shortcut out of reforms that are needed - - in terms of utilising less direct means of influencing credit and investment behaviour to safeguard financial stability ; having more comprehensive realtime data on economic activity, including fiscal indicators ; having a larger stock of foreign reserves to cushion against shocks, and the like. dollarisation would still be premised on a target value for the exchange rate at the time of the domestic currency ’ s abandonment. this again raises the question of whether such an outcome could be achieved absent an effective capital flow management regime. there is much more than can be said on this topic and on other dimensions of the central bank ’ s role, beyond the protection of the currency. the bank has been working tirelessly in all of those dimensions : strengthening the quality of our regime for supervised financial institutions ; accelerating the modernisation of the domestic payments system ; laying foundations for use of more indirect monetary policy instruments and building more capacity for macro - prudential supervision. we realise that it is only through lasting structural reforms that there would be progress in making the monetary and financial system a stable, more resilient and a less procyclical component of our growth and development. it is fitting therefore to have this esteemed panel assembled, and i look forward to hearing their views on this important topic.