APPENDIX Report on the Observance of Standards and Codes: Basel Core Principles for Effective Bank Supervision
The ECCU comprises six Fund members: Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, Saint Vincent and the Grenadines, and two British territories, Anguilla and Montserrat.
Eastern Caribbean countries institutionalized political and economic cooperation through the establishment of the Organization of Eastern Caribbean States (OECS) with the Treaty of Basseterre in 1981. Two years later they set up the Eastern Caribbean Central Bank (ECCB), which replaced the Eastern Caribbean Currency Authority.
The ratio of M2 to GDP is estimated at up to 95 percent, a relatively high figure for the level of development in the ECCU.
Most of the offshore banks are incorporated in the various jurisdictions as private institutions that are not subsidiaries of other banks operating outside of the ECCU. The offshore banks in the region total 53.
These jurisdictions are Anguilla, Antigua and Barbuda, Montserrat and Saint Vincent and the Grenadines.
The FSAP did not conduct a detailed review of the payments system. A Fund technical assistance mission visited the ECCB in December 2002 to assist the ECCB in reviewing issues related to the payments system
The following information only relates to domestic banking statistics collected by the ECCB which does not include data on offshore bank subsidiaries and affiliates. The adequacy and timeliness of loan classification and the availability of other prudential data are however important considerations.
Assessments of the AML/CFT regimes of Dominica, Grenada, St. Lucia, St. Kitts and Nevis and Saint Vincent and the Grenadines, using the common methodology, were conducted in September 2003 by the Trinidad-based Caribbean Financial Action Task Force (CFATF). The Bank plans to assess the AML/CFT regime of Antigua and Barbuda later in 2004. When completed, Reports on Observance of Standards and Codes (ROSC) for these six jurisdictions will be forwarded separately to the Executive Board. The AML/CFT regimes of Anguilla and Montserrat were assessed in October/November 2002, as part of the Fund’s OFC Module 2 program. The ROSCs for these two jurisdictions were sent to the Board in November 2003, and have been published.
The Report on the Observance of Standards and Codes (ROSC) for the Basel Core Principles for Effective Bank Supervision for the Eastern Caribbean Central Bank—Domestic Banking is attached to this report.
The offshore banking sectors of Anguilla and Montserrat were assessed under the IMF’s Offshore Financial Center assessment program in October/November 2002 and updated during this mission. These BCP ROSCs were sent to the Board in November 2003 and have been published on the IMF’s website. A review of the offshore BCP for Antigua and Barbuda was conducted from February 23 to March 5, 2004. The offshore banking sector of Saint Vincent and the Grenadines was reviewed in September 2003 as part of the FSAP and will be issued as a supplement to the Article IV report. The other ECCU members have 0–2 operating offshore banks each.
There are offshore bank affiliates licensed in Anguilla, Antigua and Barbuda and Nevis but the ECCB does not have a role in the supervision of such banks in Antigua and Barbuda.
Anguilla and Montserrat are overseas territories of the United Kingdom.
Since the FSAP mission, the ECCB has indicated that only one of the banks now has loan arrears from the public sector and that another has reduced the overdraft exposure below the approved limit.