"The Monetary Council convenes at a time when the global economy is recording its best growth in seven years with projections of 3.9 per cent for both this year and next year"
Your Excellency Dame Dr Cecile La Grenade, Governor General of Grenada
Honourable Roosevelt Skerrit, Outgoing Chairman of the Monetary Council
Dr. The Rt. Honourable Keith Mitchell, Incoming Chairman of the Monetary Council
Other members of the Monetary Council
Members of Cabinet
Members of Parliament
Members of the Diplomatic and Consular Corps
Other Distinguished Guests
Rev. Dr. Osbert James
Mr. Trevor Brathwaite, Deputy Governor, ECCB
Board members and Advisers
ECCB Management and Staff
Members of the Media
Mrs. Ursula Antoine, MBE, my dear mother
Ladies and Gentlemen
We are delighted to be back in Grenada, the Isle of Spice.
It is my distinct pleasure to welcome each of you to the Handing Over Ceremony to Mark the Change in Chairmanship of the Monetary Council of the Eastern Caribbean Central Bank (ECCB).
Today, the chairmanship of the Council passes from the Honourable Roosevelt Skerrit, Prime Minister and Minister of Finance for the Commonwealth of Dominica to Dr. The Rt. Hon. Keith Mitchell, Prime Minister and Minister of Finance for Grenada.
At this juncture, we wish to record our gratitude to the Government and People of Grenada for the excellent arrangements afforded us for the conduct of the Monetary Council’s 91st regular meeting.
Article 7(2) of the ECCB Agreement states and I quote: “the Council shall meet not less than twice each year to receive from the Governor, the Bank's report on monetary and credit conditions and to provide directives and guidelines on matters of monetary and credit policy to the Bank and for such other purposes as are prescribed under the Agreement” end of quote.
It is 10 years since the onset of the Global Financial Crisis (GFC). The Monetary Council convenes at a time when the global economy is recording its best growth in seven years with projections of 3.9 per cent for both this year and next year. That said, the global economy is pregnant with risks including climate change, spiralling debt levels, trade wars, BREXIT, rising oil prices (for oil-importing countries) and the tightening of financial conditions. Indeed, we are witnessing the “end of easy” as major central banks normalise interest rates after the unprecedented actions taken to help reboot the global economy.
Just over a month ago, I attended the Annual Meetings of the Bank for International Settlements in Basel, Switzerland - a convocation of central banks and regulators from around the globe. At that meeting, there was recognition of the considerable progress made in respect of post crisis reforms such as the recapitalisation of banks and the adoption of macro-prudential frameworks to deliver stronger oversight of systemically important financial institutions. Yet, there was a strong call to complete unfinished business before the onset of the next downturn or crisis. That unfinished business includes:
- Unburdening balance sheets of banks with large portfolios of non-performing loans; and
- Untangling the web that is the $600 trillion market for derivatives. You may recall that Warren Buffet once referred to derivatives as “financial weapons of mass destruction”.
I now pivot to the prospects for the Eastern Caribbean Currency Union (ECCU).Growth for this year is projected around 2.0 per cent and for next year around 3.5 per cent. Exactly three weeks ago (6 July), the ECCU celebrated 42 years of stability of the EC dollar pegged at EC$2.70=US$1.00. This is a remarkable feat and a testimony to the resilience of our monetary union. Today, I confirm that our EC dollar is strong. As of last Friday (21 July), the backing ratio of our foreign reserves was 97.2 per cent.
Here in the ECCU, we too have made important progress since the GFC, having enacted a new Banking Act and resolved some troubled banks. Furthermore, the rollout of the new Risk Based Supervisory Framework for banks is imminent.
We can also point to the progress made by some member countries including Grenada to put their fiscal houses in order and build fiscal resilience. Notwithstanding, we too have some unfinished business, which includes, inter alia:
- Establishment of a Regional Crisis Management Plan;
- Adoption of a macro-prudential framework (to ensure effective oversight of systemically important banks and non-banks);
- Enactment of a uniform insurance law and establishment of the Eastern Caribbean Financial Services Commission (to create a single space for insurance as currently obtains for banking and securities business);
- Establishment of a Credit Bureau (to support enhanced credit underwriting and equally important to open up the risk appetite of lending institutions); and
- Establishment of a Deposit Insurance Scheme (to protect our depositors).
Furthermore, aside from the Regional Government Securities Market, we are yet to optimise fully, our very modern platform of the Eastern Caribbean Securities Exchange (ECSE). For example, one in two citizens of the United States are invested in the US stock market and US households derive considerable wealth from the stock markets. Yet, 17 years after its creation, less than one in 10 citizens in the ECCU, in my estimation, are invested in our regional stock market. Going forward, we believe that our regional stock exchange with connectivity to global capital markets ought to be a channel of wealth creation for our people. The new strategic plan of the ECSE will propel us in that direction.
But even as we work assiduously to complete our unfinished business, we must now contend with new and emerging business.
New and Emerging Business
At the 2018 World Economic Forum in Davos, the Canadian Prime Minister, Justin Trudeau remarked, and I quote: “the pace of change has never been this fast, yet it will never be this slow again”, end of quote.
Does anyone recall when the first Automated Teller Machine (ATM) was opened? The year was 1967 – 51 years ago.
Today, the pace of Financial Technology (FinTech), inclusive of peer to peer lending, digital wallets, crowd funding, crypto-assets and initial coin offerings (ICOs), is breathtaking. And with the ubiquitous smartphone has the potential to make financial inclusion a reality for all. Lest we forget, these technologies were once mere ideas. Yet, as William Blake, the British poet poignantly observes, “what is now proved was once only imagined”.
With Blake’s observation in mind, policymakers and regulators ought to avoid a “failure of imagination” as we craft the way forward. Indeed, the onus is on us to ensure that the deployment of FinTech and our reduced use of cash develop in a way that maximises the opportunities and minimises the risks for our people. That said, imagination is a necessary, but not sufficient condition for there must also be cooperation. Indeed, regional and international cooperation is not merely the preferred way but the only way to harness these opportunities while mitigating risks such as money laundering (ML) and cybersecurity.
In conclusion, our shared vision of transforming the ECCU, as articulated in our Strategic Plan, is fundamentally about shared prosperity for all who work and live in the ECCU. To this end, we must take care of our business – unfinished as well as new and emerging.
As Governor, I feel that sense of urgency and opportunity.
Today, I reaffirm the commitment of the Board, management and staff of the ECCB to support our Monetary Council, as together, we transform the ECCU for the good of the people we serve.
Working together: governments, social partners, development partners and our people and by the grace of Almighty God, we shall succeed.
I thank you.