brian wynter : the role of monetary and exchange rate policy in jamaica remarks by mr brian wynter, governor of the bank of jamaica, to the government of jamaica, national debt exchange, kingston, 12 february 2013. * * * ladies and gentlemen, i propose to focus my remarks on the role of monetary and exchange rate policy in the context of the transaction as well as over the life of the extended fund facility that is currently being negotiated with the imf. the core objective of bank of jamaica is to maintain price stability. over the life of the programme, therefore, monetary policy will aim at maintaining single digit inflation which eventually will be brought into line with our major trading partners. we will conduct monetary policy within the framework of a flexible exchange rate regime in which the rate is allowed to adjust so as to facilitate the preservation and enhancement of price competitiveness within the jamaican economy. we expect that this policy, along with the raft of structural reforms in the programme, will induce medium - term improvements in the current account of the balance of payments. the programme, when endorsed by the imf, will also unlock access to bilateral and multilateral financing that, together with an expected normalisation in confidence and private capital inflows, will support much needed reserve accumulation. in this context, the programme will contain clear targets that will safeguard the adequacy of our gross international reserves. to further enhance the operation of the foreign exchange market, the bank will develop and introduce measures aimed at enabling the market to intermediate lumpy flows and efficiently deal with volatility. this process will commence with initiatives to facilitate a better information and price discovery process. i will now turn to some of the things the bank will be doing in the context of this transaction. first, it bears mentioning that the bank, as a major holder of goj bonds, will be participating in the exchange with 100 % of its holdings. for the rest of the financial system, the bank considers the preservation of financial system stability to be of extreme importance. our technical team has reviewed the debt exchange offer in detail and has run various stress tests that assure us that the temporary impact on financial institutions ’ profitability and capital adequacy will be manageable. nonetheless, in order to ensure financial stability, the government has revived the financial system support fund ( “ fssf ” ), which will be administered by the financial regulatory council on behalf of the minister of finance. the form of support that the fssf will

to blow a fiscal trumpet but the fact is that our recent successes in monetary policy have been supported by the remarkably consistent fiscal consolidation across successive political administrations. the fiscal anchor has secured the macroeconomic stability on which all our recent economic achievements have been built. since 2013, jamaica has made substantial progress under an exceptionally difficult economic reform programme. successive governments and the entire country must take credit for the effort. and we thank our many development partners, in particular, the international monetary fund and the inter - american development bank. the road to these historic achievements has often been difficult and painful, perhaps nowhere more evident than in the correction of a significantly overvalued exchange rate. while it was a painful transition for the country, the correction and continuing flexibility of the exchange rate helped to restore the external price competitiveness that we had lost in the preceding years. the exchange rate is now broadly assessed to be fairly valued, reflected in the strong performance of jamaica's external accounts. the external accounts indicate that, for the first time in its independent history and in the lifetime of most jamaicans, jamaica is sustainably earning enough to 3 / 5 bis - central bankers'speeches pay its bills without the indulgence of perpetual borrowing. the current account deficit is projected to remain sustainable over the medium - term. fy2017 / 18 was the third year in a row where current account transactions placed no net pressure on the foreign exchange market. this has not occurred since the early 1960's. b - fxitt and the making of a modern fx market as with inflation and the fiscal accounts, a new era has begun for jamaica's foreign exchange market. bank of jamaica introduced a new tool called the bank of jamaica foreign exchange intervention and trading tool ( b - fxitt ) in july 2017. b - fxitt is a series of measures centred on rules - based, competitive, multiple - price auctions for the central bank's transactions with intermediaries in the foreign exchange market. we started first with sale auctions which provided market participants with reassurance about the availability of future supplies of foreign exchange. with the first stage successfully concluded, bank of jamaica then introduced competitive buy operations in april 2018. a key feature of b - fxitt is that the amounts for buy and sell auctions are announced four weeks in advance. the auction rules are designed to ensure equitable access for all qualified participants, which helps to make smaller dealers more competitive and puts pressure on larger dealers to improve their margins and