The Tribune

The newly-formed regulatory body providing “co-ordinated oversight” of the Bahamian financial services industry held its first-ever meeting on Wednesday, February 19.

The Central Bank, in a statement, hailed the Bahamas Financial Stability Council’s meeting as “a significant milestone in strengthening The Bahamas’ domestic financial stability framework”.

The meeting was attended by council members from the Ministry of Finance, the Central Bank, Securities Commission of The Bahamas, Insurance Commission of The Bahamas and the Deposit Insurance Corporation.

Among the key topics discussed were the Central Bank’s Domestic Financial Stability Report, which provides insight into the current state of the Bahamian financial system and its ability to withstand stress and any potential threats.

Council members agreed on the importance of enhancing the depth and coverage of domestic financial stability assessments, making the framework more forward-looking, improving data coverage and incorporating simulations of the impact of various risks scenarios - including climate change - on financial stability.

The Central Bank said Council members also agreed to establishing a working group on data collection, and to identify a comprehensive approach to surveying the non-bank sector. This includes insurance, pensions, investment funds, money lending and pay day loan activities.

The Council members also acknowledged the importance of strengthening surveillance of non-bank lending activities to determine their impact on financial sector soundness. They backed the need for building increased technical capacity to analyse the potential impact of climate change risk on domestic financial stability, and strengthening assessment of the ties between financial sector soundness and the fiscal position.

Karen Rolle, the Central Bank’s inspector of banks and trust companies, in her 2022 fourth quarter newsletter to the regulator’s licensees, said the Council “would be a non-statutory inter-agency body established to monitor and review emerging risks that might impact financial stability, as well as facilitate regular discussions and system-wide analysis on the financial strength of systemically important financial institutions in The Bahamas”.

John Rolle, the Central Bank’s governor, subsequently confirmed that the initiative was “not triggered by any concerns about the state of financial stability, but it’s really informed by the evolution of the work we’re doing in The Bahamas to strengthen co-ordinated oversight of the financial services sector”.

“The purpose of having a Financial Stability Council or group that spans regulators, and even draws in the Government itself, it is recognising [there are] instances when a response might be needed, or in instances where medium or long-term projections suggest problems could be on the horizon or it’s necessary to take measures that span across a single set of institutions that may be required,” Mr Rolle added.

“From that point of view, the Financial Stability Council, it becomes useful in developing a playbook for how we should react in a crisis, as well as focusing on certain standards that should apply consistently in terms of the behaviour, particularly in terms of lenders or borrowers and investment markets so that the system evolves in an orderly fashion.”

The Governor added that the Council will also enable the Government and financial services regulators to “collectively monitor how things are evolving in the economy and pose questions to ourselves. And, if we are not satisfied, to be able to agree on what should be the collective intervention”.