This paper focuses on observance of standards and codes on the Financial Action Task Force (FATF) recommendations for antimoney laundering and combating the financing of terrorism (AML/CFT) for the Cayman Islands. The assessment reveals that the Cayman Islands’s legal framework for combating money laundering and terrorism financing is comprehensive. All designated categories of offences enumerated in the FATF 40 Recommendations are predicate offences under the Cayman law. The criminalization of FT is in accordance with FATF requirements. The confiscation regime meets most standards and is effective.
This paper highlights key findings of the assessment of financial sector regulation and supervision in the Cayman Islands. The assessment reveals that in the last two years, an extensive program of legislative, rule, and guideline development in the Cayman Islands has introduced an increasingly effective system of regulation, both formalizing earlier practices and introducing enhanced procedures. The implementation of financial regulation and supervision complies broadly with standards in all the areas assessed. However, issues related to resources and potential breaches of operational autonomy affect the regulator and, hence, supervision in all sectors.
This paper discusses findings of the assessment of Financial Sector Supervision and Regulation on the Cayman Islands. The assessment reveals that substantial progress has been made in the implementation of the 2003 Offshore Financial Center assessment recommendations, including, importantly, regarding Cayman Islands Monetary Authority’s independence and resources. There is scope for enhancing regulatory reporting and disclosure requirements by financial entities, such as shortening the period for filing required documents and requiring all insurers to disclose their use of derivatives and similar commitments regularly.
This paper reviews key findings of the detailed assessment of the Observance of Standards and Codes in the Financial Sector of the Cayman Islands. Banks in the Cayman Islands operate within a well-defined prudential regulatory framework, generally in accordance with Basel standards, that is, largely modeled after the framework currently in use in the United Kingdom. The two-tiered required minimum risk capital standards are significantly above those required by the Basel Capital Accord and are applied in practice based primarily on the perceived differences in risk related to bank ownership.
This year’s Annual Meetings of the Boards of Governors of the World Bank and the International Monetary Fund—the thirty-fourth—were held in Belgrade from October 2 to 5. The participants were faced with a difficult international economic situation as they met to discuss and chart the future direction of the world economy. This article reports on the main themes of the Fund Meeting.
This paper summarizes recent developments in the relationships between the IMF, member countries, and commercial banks, with specific reference to five European countries. The paper also highlights that Better assessment of trends in the market and of the attitude of commercial banks toward borrowing countries. These would include: a deeper analysis of capital flows, with special attention to interbank transactions; an improvement in the collection of statistical data and additional efforts made by member countries to release adequate information; and a further examination of the usefulness of setting up in the Fund an internal country risk assessment statistical model. The report also suggests that there should be adequate Fund involvement in rescheduling negotiations through discussions with Paris Club members on rescheduling patterns and possibly through an elaboration of guidelines for rescheduling bank claims; appropriate action to cope with liquidity crises; and adequate international cooperation among central banks acting as lenders of last resort.
The production of the Handbook on Securities Statistics (the Handbook) is a joint undertaking by the Bank for International Settlements (BIS), the European Central Bank (ECB) and the International Monetary Fund (IMF). They have specific interests and expertise in the area of securities statistics and are the core members of the Working Group on Securities Databases (WGSD). In 2007, the WGSD—originally established by the IMF in 1999—was reconvened in response to various international initiatives and recommendations to improve information on securities markets. The WGSD is chaired by the ECB and includes the BIS, the IMF and the World Bank. Selected experts from national central banks, who participated actively in the various international groups that identified the need to improve data on securities markets, were also invited to contribute to some of the WGSD’s deliberations. In mid-2008, the WGSD agreed to sponsor the development of a handbook on securities statistics. In November 2009, the report entitled “The Financial Crisis and Information Gaps”, which was prepared by the Financial Stability Board (FSB) Secretariat and IMF staff at the request of the Group of Twenty (G-20) finance ministers and central bank governors, endorsed the development of the Handbook, as well as the gradual implementation of improved statistics on issuance and holdings of securities at the national and international level. The BIS’s compilation of data on debt securities plays an important role in this respect. The Handbook sponsors responded to the demand from various international groups for the development of methodological standards for securities statistics and released the Handbook in three parts. Part 1 on debt securities issues was published in May 2009, and Part 2 on debt securities holdings in September 2010. Part 3 of the Handbook on equity securities statistics was published in November 2012. The methodology described in all three parts was based on the System of National Accounts 2008 (2008 SNA) and the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6). The three parts also went slightly beyond the confines of these standards by providing guidance and additional information on, for example, the main features of securities, special and borderline cases, and breakdowns of issues and holdings of securities by counterparty. Special attention was also paid to specific operations such as mergers and acquisitions, restructuring, privatization and nationalization, and transactions between general government and public corporations. From the beginning, the intention was to combine the three parts into one volume, thereby eliminating any overlap and repetitions between the parts. The Handbook’s conceptual framework is complemented by a set of tables for presenting securities data both at an aggregated level and broken down by various features. This should allow sufficient flexibility in the presentation of data on issuance and holdings of securities, in line with developments in securities markets and financing. The Handbook is the first publication of its kind to focus exclusively on securities statistics. Recent turmoil in global financial markets has confirmed the importance of timely, relevant, coherent, and internationally comparable data on securities, from the perspective of monetary policy, fiscal policy, and financial stability analysis. This Handbook provides a conceptual framework for the compilation and presentation of statistics on different types.
The rapid increase in the external debt of nonindustrial countries since 1973–74 and the corresponding rapid growth in cross-border claims of commercial banks have led to a vulnerable structure of international debt. The risks inherent in the system had been pointed out by observers for several years. These risks materialized in 1982, when the persistence of high positive real interest rates, the deepening recession in industrial countries, and political tensions in several regional areas combined to induce a series of adverse developments:
During the 20 years from 1960 to 1980, gross external claims of banks in the BIS reporting area4 (including cross-border interbank claims) grew at an average annual rate of about 25 percent. As of December 31, 1983, they amounted to $2,024 billion ($1,085 billion excluding redepositing among reporting banks). Banks located in the United States, the United Kingdom, and offshore centers play a leading role in the expansion of gross external assets, and the U.S. dollar remains the predominant currency, representing almost three fourths of total claims (Table 1).
As a counterpart to the rapid increase in international bank lending, the external debt of borrowing countries, and especially that of non-oil developing countries, has risen dramatically in recent years. At the end of 1982, the total reported external debt of non-oil developing countries was $633 billion (plus about $100 billion of unreported short-term debt, mainly to suppliers and parent companies of subsidiaries), compared with about $130 billion at the end of 1973. To be sure, there has been a rapid growth of exports, and the ratio of total external debt to exports has not increased as rapidly as the ratio of total debt to gross domestic product. Since the origin of borrowed funds has shifted during the period from official sources to private sources31 with market-related variable interest rates and since interest rates have increased sharply, there has been a rapid deterioration in debt service ratios (the ratio of interest plus amortization to exports of goods and services standing at 23 percent in 1982 against 16 percent in 1973) and of the ratio of interest to current account receipts (11 percent in 1981 against 5.5 percent in 1970).32 Repayment obligations will thus represent a growing proportion of gross external financing requirements, amounting to more than one half of the gross external financing requirements of non-oil developing countries in the next five years. These obligations amounted to $200 million during the period 1977–81 (against $280 million in net borrowing requirements) and might reach $400 million during the period 1982–86.