Central Bank Governor Says The Bahamas Can Reassert Itself As A Leader In International Financial Services
Addressing the Bahamas Business Outlook Conference 2001 yesterday on the topic "Where Does The Bahamas Go From Here?", Governor Julian Francis indicated he is convinced that The Bahamas is on the threshold of an entirely new period in its success as "a developing center for the delivery of high quality financial services to a global industry, which increasingly requires such services".
The Central Bank Governor commented on the vulnerability of an increasingly globally integrated economy and banking sector to influence from those who control or can exert significant pressures on the international financial system. The impact of the sensitivity and mobility of this business was such that:
- its lifeblood, the international, that is to say dollar payment , system can be made, for all practical purposes, unavailable to it within weeks, and even days; and
- any significant development which disturbs the ease of major institutions doing business from the jurisdiction -- for example, more than reasonable and relatively short-lived concern on the part of home country authorities as to the acceptability of the activity of their institutions here -- could result in the rapid relocation of business to other jurisdictions willing to accommodating the share of the industry.
According to Mr. Francis, the most important lesson to be taken from recent experiences (international initiatives) is the need for The Bahamas to be profoundly serious about the financial services industry, and not find itself in the position of playing "catch-up" to some financial centers.
He encouraged a greater appreciation of the extent of the commitment needed to facilitate the true potential of international financial services, and the role which this activity could play in the process of developing the Bahamian economy. It was not felt that The Bahamas has maximised the broad range of opportunities which this industry has presented.
Forum participants were provided with a list of steps viewed as showing serious intent, including:
- establishment of significant indigenous institutions which would be well on the way to becoming internationally recognised banking institutions;
- institutionalisation of the process for developing new industry products;
- recognition by the public sector of the need to commit resources on the same basis as the private sector to the administration, oversight and regulation of financial services;
- adherence by all industry professionals to a rigorous code(s) of conduct for doing business;
- broad community support for those policies which attract first class talent from wherever it exists to assist in building our industry;
- investment by the legal profession, especially the major firms, in the international representation and presence needed to facilitate the growth and development of the industry;
- a more comprehensive and proactive approach to the technical training and development of human resources for the financial services sector.
At the beginning of a new decade and at a time when the jurisdiction is engaged in extensive policy realignment in the financial services sector, Governor Francis pointed out that the time is right for the stakeholders of the industry to consider a new approach. The world economy and international financial services industry are undergoing rapid change and development, much of which The Bahamas can benefit from. The Bahamas is still seen, and increasingly can be seen as potentially one of the major international financial centers of this new century.
"The time has come for The Bahamas to reassert its position as one of the leaders in this business, not following but imposing innovative ideas on an industry which is still hungry for a true leader." said Governor Francis.
As part of the new package of industry legislation entered into force at the end of December, the powers of the Central Bank Governor have been expanded. The Central Bank of The Bahamas Act 2000 provides for improved supervision, including an appropriate level of on-site inspection of banks, full cooperation on cross-border supervision of banks, and enhanced cooperation between the Central Bank and overseas regulatory authorities. The new Act also provides extensive information gathering powers for the Central Bank.
Similarly, The Banks and Trust Companies Regulation Act 2000, also now enacted, enhances the role of the Central Bank Governor; expands the licensing criteria for banks and trust companies; provides enhanced supervisory powers for the Inspector of Banks and Trust Companies; provides for cross-border supervision by foreign regulators; and increases the number of expressed exceptions to the statutory duty of bank confidentiality.
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