February 15, 2019 – The financial sector in Grenada and other member countries of the Organisation of Eastern Caribbean States remained “broadly stable” in 2018.
Prime Minister and Minister of Finance, Dr. the Right Honourable Keith Mitchell, who is currently the Chairman of the Eastern Caribbean Currency Union (ECCU) indicated this as he delivered the communique at the end of the 93rd Meeting of the Monetary Council of the ECCU in St. Kitts and Nevis on Friday.
The preliminary Financial Stability Report was one of the matters discussed by the Monetary Council.
Dr. Mitchell reported that “developments in the ECCU banking sector through 2018 were largely positive.”
He noted too that, “The insurance sector was assessed as broadly stable and solvent with an increase in premiums.
Profitability was reported to have improved following the tumultuous events of 2017.”
The Prime Minister further stated that there are several ongoing initiatives which would enhance financial stability.
“These initiatives included implementation of a risk based supervisory approach for the commercial banking sector; regulation of the Caribbean Credit Card Corporation (4Cs); and the establishment of a credit bureau in the ECCU.”
Grenada is one of four OECS member states that have enacted the Harmonised Credit Reporting Bill which would pave the way for the creation of the credit bureau.
The purpose of the bureau according to the communique, is to “provide credit-granting institutions with better means to access information and to facilitate the extension of credit to underserved segments of the population.”
Dr. Mitchell said the ECCU Monetary Council also noted the proposed framework for identifying systemically important commercial banks and credit unions in the ECCU.
He revealed that twelve institutions were identified, of which three were banks and nine were credit unions.
Dr. Mitchell said, “While commercial banks continued to dominate the financial sector, credit unions were expanding, becoming an increasingly important source of credit to the private sector through increases in membership, assets, loans and deposits.
The boom in credit union activity has implications for financial inclusion and the financial stability framework.”
Friday’s Monetary Council meeting also received the ECCB Governor’s Report on Monetary and Credit Conditions in the ECCU, which was based on developments in 2018.
The report, according to the communique, was developed against “the backdrop of global economic and financial developments and within the context of the bank’s broader objectives of ensuring the stability of the exchange rate and the financial system.”
Dr. Mitchell said one of the factors noted in the Governor’s report was that domestic credit in the banking sector declined by about 5.3% to $8.6 billion, which was largely influenced by lower credit to the private sector but mitigated by a decrease in net credit to government.
The report also noted that credit extended by the credit union sector increased.
There are projections that money and credit conditions in the ECCU will improve in 2019, supported by stronger economic activity.
The communique also revealed that net foreign assets stood at $4.6 billion, at the end of November 201), which represents an increase of 2.6% over November 2017. The EC dollar remains strong with a current backing ratio of 98.6%.