The deputy governor of the Eastern Caribbean Central Bank (ECCB), Trevor Brathwaite, has warned about the impact on the region of de-risking by international banks.
De-risking is the process of international banks terminating relationships with correspondent banks.
According to the Antigua Observer, it is done to avoid tedious “risk based procedures”.
The procedures have been imposed by the Financial Action Task Force on Money Laundering to limit financial crimes, the Observer said.
It quoted Brathwaite as saying that the measure will have multi-sectoral impact on regional economies, which could mean a stop to economic activity.
The ECCB official said:
“If you want to take it to the extreme, you and I will not be able to shop in a supermarket because the supermarket will not be importing the stuff we like to buy,” he said. “You and I will not even be able to buy shoes and clothes … cars, tyres and parts.”
He explained that local banks will not be able to process purchase transactions and merchants will not send goods without the assurance of payment.
“We are importing nations, so most of everything that we use, we import. For you to import you must have the ability to pay for those imports. Even if you had a lot of EC dollars to pay for your transaction, then without a correspondent banking relationship, that’s where it stops,” the ECCB official said.
He added that while such an occurrence may boost the consumption of local goods, there may be internal issues with producers being able to keep up with supply.