The Eastern Caribbean Central Bank (ECCB) is at a defining moment in time and in the economic and financial history of the Organisation of Eastern Caribbean States (OECS). A new governor is about to take the helm of the institution which governs the most important sector in our countries, the banking sector. But the ECCB also provides economic intelligence on the member countries of the OECS as well as suggests policy guidance that the countries can follow to ensure sustained economic growth and development.
Hence, irrespective of how one feels about this institution, there can be no denying that the ECCB has and will continue to play a significant role in the advancement of banking and the economic life of all the citizens of the OECS.
But, the road travelled has not always been smooth for the ECCB and its managers. For instance, after a financial loss on its own books in 2014 and following several bank collapses in the Eastern Caribbean Currency Union (ECCU) countries under the rein of the outgoing governor, the ECCB is about to select a new governor to chart the course and direction of this institution for the next five years, minimum.
Given the challenges facing that institution in managing its own financial affairs and the continuous economic difficulties that all of the member countries of the ECCU are forced to confront year after year, it is clearly high time for the ECCB to advance to the 21st Century and create a coherent fiscal policy for our sub-regional countries to adopt and implement and more importantly a vision for the future of the financial sector.
Furthermore, the increased regulations spearheaded by the ECCB on both insurance and banks may have come due to legitimate reasons; however, the extent to which the bank has gone can easily be pigeonholed as far reaching.
What the preceding paragraphs clearly highlight is the need for change within the ECCB in terms of its governance vis-a-vis the regulation of our banking industry and the kinds of policy guidance it advocates for the member countries of the ECCU. And that change has to be lead by the new governor who should be bold in his decision making but reasonable so that the changes put forward could redound to the benefit of our financial sector in particular and our economies in general.
Indeed, the call for change in this essential institution should not be taken lightly because change is all we as a serious people can ask and hope for in the New Year with the assumption of office of the new governor.
Although not directed specifically at the ECCB, the idea of change within the context of central banking is expressed quite eloquently by Radoica Luburic in an article entitled: “Challenges in Change Management in Central Banks,” published in the Journal of Central Banking Theory and Practice (2013).
Luburic writes: “Someone said long time ago that everything is subject to change and that change is the only constant. If changes, as occurrences of long duration, are viewed through their temporal dimension, we will see that they are unstoppable. This is how it has always been and how it will always be…Scientists have been warning that this acceleration of changes should be taken very seriously because these are not some kind of sporadic and accompanying occurrences of limited effects and duration but ongoing and dynamic processes taking place in every sphere of social life to varying degrees. Successful change management, therefore, has been increasingly gaining importance and becoming the conditio sine qua non for a sustainable development of organisations and, therefore, of financial and banking institutions.”
The article continues: “Certain specific features that are characteristic of a central bank are primarily determined with the importance this supreme monetary authority has not only in the financial system of a country, but also in the entire society. The main task of a central bank is the preservation of price and financial stability, and indirectly and keeping in mind the global interconnections, even broader than that. Acceleration of changes in all spheres of social life calls for not only the need to question the traditional understanding of change management in central banks, but also to redesign and innovate the existing models thereof.
If central banks change following the principles of quality management and if they successfully manage risks and become more committed, powerful and transparent in strengthening their role in the area of social responsibility, they will have the opportunity to go down the road of success, regardless of all temptations that will be waiting for them on this road.”
On the basis of the sentiments from Luburic and given the need for change within the ECCB, if your humble servant has to give Santa his wish list for the ECCB this is what it would look like:
(1) Please award us a visionary leader who not only understands the intricacies of our financial sector and economies but who also has the ideas and drive to create a new direction to lead the sector into the contemporary era.
(2) Open the eyes of the ECCB to the new dynamics in the financial sector.
(3) Teach us all about FinTech and how we can make the ECCU a centre of financial innovation by allowing the banks to join the movement and facilitate innovative solutions here and globally, making the OECS known for progressive banking instead of a money-laundering hub.
(4) Can we please have simpler legislation that doesn’t require fleets of lawyers and accountants to interpret? And, please, before any legislation passes let the people voice their opinion.
(5) Make 2016 a year of the Small Business for that is the future of our sub-regional economies.
(6) Make the bankers remember they are here for we the people, not for themselves. They are entrusted with our hard earned money but they also have to serve our needs.
Will you grant my wishes, Santa?
(Dr. Brian Francis, a former Permanent Secretary in the local Ministry of Finance, is currently a Senior Lecturer in the Department of Economics at the Cave Hill Campus in Barbados of the University of the West Indies)