The International Monetary Fund (IMF) says it has made headway in assisting the Caribbean region in dealing with problems faced due to the loss of correspondent banking relationships (CBRs) also known as de-risking.
IMF Managing Director Christine Lagarde told delegates at the 2017 High Level Forum in Jamaica on Thursday that following a recent closed door meeting in Barbados, organized by the Fund, that respondent banks in the region will now get technical support from correspondent banks to help them improve the information gaps and regulatory expectations.
“…several correspondent banks are providing technical support to respondent banks in the region—so that they can better address information gaps and regulatory expectations.
“This includes upgrading of systems and processes to better, and more cost-effectively, meet the requirements of home regulators,” Lagarde said.
She said that because of the intervention of the IMF, a global bank, that left the region, the name and location she said she will not disclose, has re-engaged with some respondent banks.
“A major money center bank, again I will not mention the name or the origin, that had left the region has now re-engaged with some banks,” the IMF boss said.
Sean Hagan, Legal Counsel for the IMF said that the major bank has been acting as an intermediary for the past 10 months.
Lagarde also disclosed that every bank in Belize, which lost two-thirds of their correspondent banking relationships, now has at least two correspondent banking relationships, and can process transactions in a timely manner.
The IMF boss says the Fund facilitated the international dialogue on the issue primarily to foster “a shared understanding of the problem, and to help develop policy responses that are tailored to specific challenges faced by Caribbean economies.”
However, she added that “notwithstanding [the] important progress, the issue continues to be a challenge.”
But she says the IMF will not give up in its attempts to work with the regional to find a solution, “not only on the loss of CBR but also on the high costs of international payments.”