they do have a more intimate bis central bankers ’ speeches understanding of the economics and politics of their country of origin than non - jamaican investors. lingering concerns about investing in jamaica, whose sub - investment grade credit rating is under pressure, can be mitigated through a partial risk guarantee of these diaspora bonds from either the world bank, or the international development association ( ida ), or the multilateral investment guarantee agency ( miga ). such a guarantee structure would not only catalyze additional private financing for jamaica, but might also raise the rating on the diaspora bonds to investment grade. a 5 percent tax - free u. s. dollar interest rate, for example, could attract a large number of jamaican investors who are getting close to zero interest rate on their bank deposits. not only jamaicans, but also foreign individuals interested in helping jamaica are likely to be interested in these bonds. that would further expand the pool of potential investors in jamaica ’ s diaspora bonds. marketing of such diaspora bonds in the u. s. would, however, require a temporary exemption from u. s. sec regulations. unlike borrowing from the multilateral financial institutions or international capital markets with fixed terms and conditions, a diaspora bond can be structured with greater flexibility. one example of this flexibility would be the option to pay the interest in jamaican dollars rather than in u. s. dollars. this may relieve an investor from having to remit funds on a periodic basis to assist families and relatives in jamaica and from having to incur high money transfer fees. on the government side, there will be little or no pressure on the jamaican currency to service debt interest payments. finally, jamaica ’ s diaspora bonds can offer investors the opportunity to do – good ‖ in their country of origin, especially if targeted to finance specific projects in which the jamaican diaspora has a special interest. these projects can range from non - traditional economic areas targeted under the government ’ s medium strategy, to infrastructure projects in jamaica ’ s bauxite, mining, and tourism sectors, and to specific education, health and poverty alleviation initiatives. conclusion in conclusion, ladies and gentlemen, the problems facing the caribbean region are too deep - rooted to be solved with traditional policy measures. innovative solutions are needed to contain the onerous public debt overhang, regain fiscal stability and strengthen economic growth. diaspora bonds represent a new instrument in the policy arsenal. it is disheartening however that despite the impressive size of the potential market for caribbean diaspora bonds, no country

to ccc +, still below the previous level. although the financial system in the caribbean has a strong presence of canadian banks, which has helped to limit the contagion impact of the global crisis, financial stress still exists across the region. credit quality, particularly for indigenous banks, has deteriorated in light of the downturn, coupled with weak oversight and low loan provisioning ratios. high exposure to sovereigns ( including to those that have recently restructured or about to restructure debt ) requires regional central banks to keep closer oversight and stand ready to intervene, if necessary. on the nonbank side, almost four years after the collapse of the insurance subsidiaries of the cl financial group, resolution has been uneven. in trinidad and tobago, the recent launch of the clico investment fund ( cif ) has brought some closure to the settlement of claims due to clico policyholders, but has come at considerable cost to the state. contingent liabilities associated with the resolution in trinidad and tobago have reached an estimated one - tenth of gdp. in barbados, the resolution is still pending. in the eastern caribbean currency union ( eccu ), where insurance claims exceed 17 percent of gdp, part of the insurance subsidiary is being sold, and a fraction of the claims are pending a regional resolution. with predominantly fixed exchange rate regimes in the carciom region ( 10 out of 14 countries ) inclusive of a currency board arrangement for the eastern caribbean, devaluation is not an option for caribbean countries to support their weakening external bis central bankers ’ speeches positions. barbados, in particular, remains vehemently opposed to such an action, which it considers ill - conceived and will not correct fundamental economic problems facing small, middle - income caribbean countries. the caribbean region as a whole, therefore, needs to explore innovative sources of financing to contain the onerous public debt overhang, regain fiscal stability and strengthen economic growth. diaspora bonds – an innovative financing solution ladies and gentlemen, beyond managing the near - term risks associated with the global crisis, the caribbean region must continue to address its fundamental economic issues over the medium term, paying particular attention to the legacies of the crisis. in this regard, i firmly believe that caribbean policymakers will need to adopt innovative financing solutions in support of the region ’ s economic growth, transformation and development. many of you may be aware that the caribbean has a large, highly educated diaspora pool. using a well - established world bank methodology and adopting a narrow but useful definition of the diaspora