raised its voice in the reform exercise, in particular, in pressing for special recognition for the problems of small states and for participation in the formulation of the standards and codes for the offshore centers. notwithstanding the reforms i have outlined, the old image of the imf in the caribbean has prompted several governments to avoid entering into formal financial arrangements. however, by and large, the bretton woods agencies are now well accepted in the region as partners for policy dialogue and as sources for capacity building. many countries in the region now formulate home - grown programmes which are submitted for the approval of and monitoring by the multilateral agencies. there is a current proposal in the region for a regional financing mechanism ( a kind of regional imf ) to fund programmes that are monitored by a regional agency, working in collaboration with the imf or world bank. but, that ’ s a discussion for another time.

jwala rambarran : strengthening banking regulation and supervision in the caribbean opening remarks by mr jwala rambarran, governor of the central bank of trinidad and tobago, at the basel ii implementation workshop, port of spain, 17 – 20 september 2013. * * * good morning, first, i wish to thank cartac for arranging this basel ii implementation workshop and for inviting me to give some brief opening remarks this morning. as we all know, safe and robust banks operating in a well regulated financial system play a key role in the economy and society. one of the main lessons of the recent global financial crisis is that banks must improve their ability to manage risk, so they do not inflict serious damage on the economy. this calls for a stronger risk management culture within banks. this calls for stronger regulation and supervision within central banks and other regulatory agencies. in today ’ s discourse, most commentators assume that “ strengthening regulation ” is simply a matter of implementing international standards, of which the most important is the basel capital accord, designed by the basel committee on banking supervision. other commentators, however, have examined alternative approaches to prudential regulation beyond standards. they argue that a strategy for prudential policy must address three main weaknesses : the impossibility of fine - tuning bank safety margins in the uncharted territory that is banking in the developing world ; the need to provide insulation against the large shocks to which these economies are prone ; and the lack of enforcement that results from the concentration of political power in many such countries. this year marks the 25th anniversary of the 1998 basel capital accord, which through its two incarnations has emerged as the international gold standard for banks ’ capital requirements. the first manifestation came in june 2004 when the basel committee wholly rewrote the original basel accord, which has a number of flaws. for instance, it is risk insensitive, it does not differentiate between credit risk and other risks a bank typically faces, and it can easily be circumvented by regulatory arbitrage. the new accord, generally known as basel 2, represented a fundamental change of approach to regulation. the revised framework is highly complex and makes its understanding and implementation a great challenge, not only to regulators but also to the regulated community. basel 2, for example, assumes that discipline by the markets and by supervisors is beneficial. yet, as we have seen, particularly over the last five years, both markets and governments can, and do, fail. the second incarnation of the