The Governor of the Eastern Caribbean Central (ECCB) has conceded to imperfections in the proposed Banking Act, denied that it’s a move to canvas more power, and stressed the urgency of the law in preventing a banking calamity.
During an hour-long exclusive interview with OBSERVER media, via teleconference, Sir Dwight Venner sought to justify the bill, pointing first to a global financial crisis in which banks were hard hit.
He said the Banking Act is in keeping with what countries internationally are doing to prevent or mitigate against another crisis in the future. Local events too, Sir Dwight said, like the run on the Bank of Antigua, now ECAB, and the demise of Antigua Barbuda Investment Bank (ABI), justify the new Act.
But the governor also said, there were other factors which he could not responsibly reveal, which make the Bill “an emergency.”
“If we get drawn out between now and December trying to get this legislation passed, we are going to be in very serious trouble,” Sir Dwight said.
He said the Act was needed now, to “protect depositors” and establish our “international credibility.”
Sir Dwight said there was already evidence that local banks were suffering as a result of the current regulatory environment, making reference to new challenges with correspondent banking relationships.
“You need to have a correspondent bank in another country to do things like letters of credit…if you don’t have that you are effectively cut off from the rest of the world. This is a matter of life and death for us,” the governor said.
The governor said while the bank was “vigorously protesting” the threat to international banking relations, the new Banking Act is needed to reassure partners that the region in conforming to international standards.
The Act has already been passed in St Lucia and St Vincent and the Grenadines and had its First Reading in the Parliament of Antigua & Barbuda last month.
Stakeholders, including a parliamentary sub-committee, have been meeting on the Bill, even though government insists that no changes will be made at this time.
The law has been strongly criticised by those in the banking sector, lawyers and financial experts who argue that too much power is placed in the hand of the regulator.
But Sir Dwight rebuffed that claim, telling OBSERVER media that some of his critics were seeking to personalise the issue.
“We live in a region where everything is personalised. If people cannot find somebody or something to hang, they get very dissatisfied and that’s the price you pay for being unwise enough to take these positions, but somebody has to do the job,” Sir Dwight charged.
He discourages changes to the Act in respective parliaments, “because of the new economic union treaty” which established a single financial space in the OECS.
Under the Act, when the Central Bank grants a banking licence in one country, it automatically applies to other member states, although critics say this as an infringement of national sovereignty.
The minister of finance also takes a back seat in the granting of licenses, ceding that responsibility to the regulators.
The governor argued that notwithstanding that provision, the minister of finance is not excluded from the process due to his role on the OECS Monetary Council.
Sir Dwight also defended a contentions provision in the Bill requiring EC$20 million startup capital for banks, saying the five million dollars, which previously applied, is inadequate to protect depositors.