As the Bank of Jamaica (BoJ) moves to further strengthen measures to safeguard the financial sector, Minister of Finance and Planning, Hon. Dr. Peter Phillips, is encouraging Credit Unions to accept the new regulations when they come on stream.
Addressing the recent Caribbean Confederation of Credit Unions (CCCU) Annual International Convention, at the Ritz Carlton Hotel, in Montego Bay, the Minister said it is now widely accepted that inadequately regulated financial institutions, including credit unions, could undermine stability in the financial system stability.
“Work is currently in progress towards providing the Bank of Jamaica with statutory responsibility for the oversight of stability of Jamaica’s financial system. This move to empower the Central Bank is consistent with the global response to the recent international financial crisis, to locate this function within respective central banks,” Dr. Phillips told the Convention.
While lauding the credit unions for their buoyancy during the mid 1990s financial meltdown, he said fragile regulatory regime contributed to the crisis, and the important lesson learnt will be utilised to prevent a repeat.
“We have learnt that you need to have sound regulations of all your financial institutions if we are to avoid that catastrophe. We are committed to maintaining financial system stability, and to do whatever is required to promote growth; and we are equally committed to having the Credit Union Movement last in perpetuity as a central part of our financial system make up. But, we need to be prepared to make the necessary adjustments,” the Minister emphasised.
He said the Government is pleased that the movement has been playing a pivotal role in mobilising funds for people who would be challenged to access financial schemes at banks, “particularly for your support for the micro, small, and medium enterprise sector within the Caribbean."
“This support has done much over the years, and will in the future do much to help ordinary Caribbean people fulfill their aspirations. We are prepared, in Jamaica, to work with our credit union league to help prepare not only our own regulators, but to prepare the credit union movement to adjust to this new environment,” Dr. Phillips said.
Meanwhile, President of the CCCU, Yvonne Ridguard-Harris, said it is important that credit unions continue to deliver their financial services in a safe and sound environment. She added that the organisation is cognisant of the changes and challenges facing the financial sector, and as governments in the region move to enforce new regulations, the movement is not averse to being regulated.
“We believe in and accept that it is to our benefit to operate within prudential standards. What we object to, and continue to object to be is being regulated as banks. The CCCU intends to continue its advocacy programme to ensure that credit unions benefit from enabling legislation,” she said.
The CCCU was established in 1972, as a successor to the earlier West Indies Confederation of Credit Societies. It serves some 17 territories in the English and Dutch-speaking Caribbean. It has a membership of 1.8 billion, 255 affiliated credit unions, savings of US$3.1 billion, total assets of US$3.8 billion, and total loans of US42.6 billion.
By Garfield L. Angus, JIS Reporter