The FSAP team was led by Messrs. S. Kal Wajid (IMF, Mission Chief) and Giovanni Majnoni (World Bank, Deputy Mission Chief) and was composed of Messrs. Robert Keppler, John McDowell, Craig Thorburn, Mss. Bikki Randhawa, Melinda A. Roth (all World Bank); Messrs. Tonny Lybek (MAE), Vassili Prokopenko (MAE), Mss. Ruby Randall (WHD), Massa Lansanah-Richardson (Admin. Assistant-MED) (all IMF); and Messrs. Carlisle Procter (external expert, formerly with the Reserve Bank of Australia), Keith Bell (external expert, formerly with the Office of Superintendent of Financial Institutions, Canada), and Erik Huitfeldt (external legal expert).
Macroeconomic developments and risks are discussed in detail the staff report for the 2002 Article IV consultation (SM/02/3S3).
The Barbadian dollar has been pegged to the U.S. dollar since mid-1975 at BDS$2.00=US$1.00.
Three-months treasury bill rates stood at around 2.5 percent at the end of second quarter 2002.
The CBB does not collect the information on the performance of interbank money market.
An analysis of intermediation spreads is contained in the Selected Issues Volume of the FSAP report.
Precise figures on the importance of the offshore sector are not available. There are a number of derivative effects, largely from payment of wages, taxes, and purchases of local goods and services. It has been estimated that the offshore sector contributes to the employment of more than 3,000 persons and generates around US$110 million annually in foreign exchange inflows (See Michelle Doyle and Anthony Johnson: “Does Offshore Business Mean Onshore Economic Gains,” Working Paper of the Central Bank of Barbados, 1999). It is estimated that offshore activities contribute almost 40 percent of the government’s corporate tax revenue, with international business companies as the main contributors.
Third party deposits refers deposits from persons other than a licensee’s shareholders, holding company, subsidiaries, associates, or affiliates.
Banks are required to follow International Accounting Standards (IAS).
The CBB publishes monthly aggregated summary balance sheet information of the commercial banks; PriceWaterhouseCoopers collects and publishes the annual Financial statements of individual banks (http://www.pwcglobal.com/br).
There is also a risk for natural disasters, but Barbados is, due to its location, historically less prone to hurricanes than other countries in the Caribbean. The insurance sector is particularly vulnerable to such events, suggesting a need for diversifications of their assets across countries.
As of March 2002, commercial banks’ credit sectoral distribution was; personal loans 40 percent; tourism 11 percent, distribution 9 percent; professional and other services 9 percent; construction 6 percent; statutory bodies 5 percent; manufacturing 4 percent; financial institutions 4 percent; agriculture 2 percent; and other credits 10 percent. Banks’ loans and advances accounted for 48 percent of local assets, and government securities for 18½ percent of total assets.
Currently, banks report lending to different sectors, but reporting of classified loans is done on an aggregated basis. It is encouraging that the CBB is planning to collect information about loan categorization for credit to each sector, including restructuring of loans, which will allow for more detailed analysis of individual banks’ vulnerability to specific economic sectors.
If a bank has a short position in forwards, it may maintain a long spot position equivalent to 20 percent of the short position in forwards or 15 percent of spot liabilities, whichever is higher. If a bank does not have a short position in forwards, it may maintain long spot position equivalent to 15 percent of spot liabilities. Some banks have a specified nominal limit reflecting their needs. The calculation does not include options. Banks only report their position of a specific day during the week to the CBB.
The CBB uses an internal note for handling distressed banks including seizure and control.
The mission’s assessment is based on the draft AML/CFT methodology developed by the IMF and the World Bank.
The FIU is staffed with a director, four analysts, and one support staff.
The assessment was undertaken by Vassili Prokopenko (IMF).
The International Financial Services Act deals with offshore banks. The International Business Companies Act, and its Regulations, also have a bearing on establishment.
The Exempt Insurance Act deals with offshore companies.
The Governor of the Central Bank is a Director ex-officio.