Antigua and Barbuda Prime Minister Gaston Browne has called for a coordinated strategy in tackling the region’s corresponding banking issues.
Browne told the Caribbean Community (CARICOM) Heads of Government Summit in Belize on Monday that the “existential threat posed to the financial stability of CARICOM by the loss to ‘corresponding banking’ must be tackled through” this strategy.
The Antiguan leader made the comment while leading his colleagues on the agenda item, “Tackling the continuing threat of withdrawal of corresponding banking services from member states: Elaborating a CARICOM agenda.”
It was the first issue discussed in the first business session of the 27th Inter-Sessional Meeting of the CARICOM Heads of Government, held at the picturesque Placencia, Belize, according to an Antigua and Barbuda government statement.
It said the issue of the threat of withdrawal of corresponding banking services brought to the fore the related problems in “de-risking” and its consequences.
According to the statement, de-risking refers to the occurrence of financial institutions terminating or restricting business relationships with clients or categories of customers to avoid, rather than manage, risk through risk-approaches.
“Small states like those in the Caribbean have been negatively affected by recent ‘de-risking’ policies implemented by international banks, with particularly damaging consequences on correspondent banking relationships,” the statement said.
Browne said “de-risking,” therefore, results in CARICOM-member states “being delinked from the international payment system.
“This means that the approach of de-linking will impact negatively on investment, trade and remittances,” he said, adding that it “may even result in difficulties purchasing basic goods such as food and medicines.”
Browne said this is exacerbated by the unilateral classifications by countries and states within the U.S. of “our member states as tax heavens.”
“This unfair stigmatization on member states must be fought collectively by CARICOM Member States,” Browne said, describing the situation as “tantamount to an economic blockage.”
As a consequence, he said “we need to work cooperatively to address this urgent matter.”
The Antiguan prime minister outlined a menu of varied recommendations emanating from the Committee of Finance Ministers, which he chaired in Belize on Monday.
Key recommendations included the chairman, Belize Prime Minister Dean Barrow, writing to U.S. President Barack Obama seeking clarification on the nature of the issue “that is giving rise to the heightened risk aversion towards Caribbean traction by U.S. regulatory authorities.”
In addition, Browne was also mandated to forward similar communication to the U.S. Treasury Department “to inform the U.S. authorities on the preparation for a July Meeting in Jamaica.”
The convening of a high level forum in July is to resolve operational, administrative and regulatory issues as they relate to the de-risking of the banking relationships by U.S. corresponding banks, the statement said.
Other recommendations include CARICOM’s exploration of the viability of establishing a Caribbean clearing house, “with the possibility of capitalizing this entity domestically.”
CARICOM Heads of Government agreed that immediate work will be undertaken to explore the feasibility of such options.
Browne said the Special Meeting of Ministers of Finance also agreed that CARICOM Member States raise the matter at the level of the World Trade Organization (WTO) and the United Nations in general.