Bills To Bring Credit Unions Under BOJ’S Supervisory And Regulatory Regime To Be Advanced
By: , March 10, 2021
Photo: Adrian Walker
Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, opens the 2021/22 Budget debate in the House of Representatives on March 9. The Full Story
In the upcoming financial year, the Government will be advancing the passage of two companion Bills, which will enable the creation of a framework to bring the operations of credit unions fully under the supervisory and regulatory regime of the Bank of Jamaica (BOJ).
These are the Credit Unions (Special Provisions) Bill and the Co-operative Societies (Amendment) Bill.
The move was announced by Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, as he opened the 2021/22 Budget Debate in the House of Representatives on Tuesday (March 9).
He said that the framework will allow the BOJ to have greater management of the credit union sector.
“We have vested the Bank of Jamaica with oversight for overall financial system stability, and it is important that we, therefore, provide the opportunity to discharge that function by not having a major deposit-taking sector sitting outside of its supervisory reach,” Dr. Clarke pointed out.
He noted that as at December 2020, there were 25 credit unions operating in Jamaica with assets of $137 billion, representing seven per cent of gross domestic product (GDP), and with membership in excess of one million Jamaicans.
“These facts make the credit union sector systemically important to financial system stability,” he said.
Dr. Clarke further noted that the vital importance of the formal supervisory role of the BOJ was demonstrated this year “when the Central Bank, in the context of the coronavirus (COVID-19) pandemic, found it necessary to also make liquidity available to the credit union sector”.
“The BOJ is in a stronger position to be the lender of last resort if it exercises a supervisory function with respect to credit unions and is familiar with the detailed financial operations of entities,” he said.
In addition, the Finance Minister noted that under Central Bank supervision, savings within the credit union sector would be insured under the Jamaica Deposit Insurance Scheme.