The Financial System in the ECCU
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The financial system in the Eastern
Caribbean Currency Union (ECCU) comprises domestic
banks, offshore banks, credit unions, insurance companies,
national development foundations, development
finance institutions, building and loan associations and
finance companies.
The regulatory framework of the domestic banking system
has two main legislative components. First, there is the ECCB
Agreement Act, 1983 and its amendments, which under Article
3 paragraph 2(e) of the ECCB Agreement Act gives the Eastern
Caribbean Central Bank the power to “regulate banking
business on behalf of and in collaboration with Participating
Governments.” Second, there are the Banking
Acts of the various territories of the Participating Governments
which govern the regulation of banking business in those territories.
Over the period 1988 to 1992, new banking legislation was
enacted in each of the member states. These Acts, collectively
referred to as the Uniform Banking Act, were uniform across
the currency area, and their adoption facilitated the harmonisation
of banking business within the ECCB area. Over the period
2004 to 2006, the Banking Acts in the territories of the Participating
Governments were revised and upgraded in relation to the Basle
core principles. This harmonised banking legislation has strengthened
the legal framework for the conduct of banking business and
enhanced the regulatory environment.
The harmonised Banking Acts recognise the ECCB as the ECCU’s
Central Bank, with primary responsibility for the supervision
of domestic banks. The ultimate authority for regulating institutions
covered by this Act is jointly vested in the Minister of Finance
and the ECCB. The Minister of Finance is normally required
to act in consultation with, and on the recommendation of
the ECCB with respect to those areas where the Minister of
Finance has ultimate responsibility.
All commercial banks and other institutions deemed to be
carrying on banking business are required to be licensed under
the Banking Act and are regulated by the ECCB. As part of
the ongoing supervision, licensed financial institutions are
required to submit monthly, quarterly and annual returns to
the ECCB. These returns provide essential information to assess
the performance of the institutions and the financial system,
and to inform policy decisions. In addition, periodic visits
are made to the institutions to verify the information submitted.
The offshore financial services sector is governed by the
Offshore Banking Acts in the respective countries and is primarily
the responsibility of the national regulators.
The ECCB provides support and actively monitors developments,
primarily in the credit unions and insurance sectors. These
sectors are supervised by the relevant government
authorities, however there is an ongoing initiative to
establish single regulatory units within the territories of
the Participating Governments to regulate all financial institutions.
Overall, the regulation and supervision of the financial
sector in the ECCU is being enhanced with the ultimate objective
being the establishment of harmonised laws that are consistent
with international best practices and a regulatory and supervisory
unit for financial services in each member state.
Locally incorporated banks
Banks that are incorporated within the Eastern Caribbean Currency
Union (ECCU) and may be either locally owned or a foreign-owned
subsidiary.  top
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Foreign incorporated
Banks that are incorporated outside the ECCU and are established
as branches within the ECCU. These banks generally do not
hold capital on the books. Capital is assigned annually by
their head offices, based on their level of deposits. top
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The Finanical System in the ECCU
