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ECCB Agreement Legislation

Legal and Regulatory Framework

The ECCB Agreement

The Eastern Caribbean Central Bank Agreement, 1983 is a treaty among the Participating Governments of the Eastern Caribbean Currency Union (ECCU) committed to collaboration in the area of central banking.  The Participating Governments are Anguilla, Antigua and Barbuda, Commonwealth of Dominica, Grenada, Montserrat, Saint Christopher (St Kitts) and Nevis, Saint Lucia and Saint Vincent and the Grenadines.  The Preamble to the Eastern Caribbean Central Bank Agreement Act (“the Agreement”) establishes the main objectives of the collective agreement.  It reads:

“Whereas it is desired to maintain a common currency and to establish a Common Central Bank with powers to issue and manage that currency, to safeguard its international value, to promote monetary stability and a sound financial structure and to further the economic development of the territories of the Participating Governments.”

Article 4 clearly enunciates the purposes of the Bank which are:
  1. to regulate the availability of money and credit;
  2. to promote and maintain monetary stability;
  3. to promote credit and exchange conditions and a sound financial structure conducive to the balanced growth and development of the economies of the territories of the Participating Governments;
  4. to actively promote through means consistent with its other objectives the economic development of the territories of the Participating Governments.

A clear organisational structure is established in the Agreement with a three tiered approach to decision making:  (1)  at the lower level, the Governor appointed pursuant to Article 9 (3) is charged with responsibility for the day to day management of the Bank and to be responsible to the Board for the implementation of the policy;  (2)  The Board established by Article 8 (1) is responsible for the policy and general administration of the Bank subject to the exercise of functions by the Monetary Council; (3)  The highest authority under the Agreement, the Monetary Council is established by Article 7 (1).  

The ECCB Agreement

The Banking Act

The Banking Act 2015 was drafted within the context of developing of a single banking space in the ECCU.  The ECCB is the licensing authority for the banking sector and a single licence authorises a financial institution to operate in the space on a branch basis subject to approval of location of new business premises.  In addition, the Banking Act:

  • strengthened the penalties under the Act to make them more prohibitive and introduced administrative penalties for contraventions of provisions in an effort to improve enforcement by the Central Bank;
  • improved the corporate governance framework by expanding the fit and proper criteria to render their applicability to all directors, officers and significant shareholders and allowing for the resultant suspension or removal from office of directors and officers who do not meet the fit and proper criteria;
  • increased the minimum paid-up or assigned capital of a financial institution;
  • introduced a framework for the licensing and regulation of financial holding companies;
  • strengthened the remedial action tools and adopted mechanisms that would allow for the resolution of troubled banks at least cost.

The table below illustrates the number, year and commencement date of the Banking Act in each member territory.

Banking Act in Member Territories
AnguillaNo 6 of 201518 April, 2016
Antigua and Barbuda No 10 of 201501 October, 2015
Commonwealth of DominicaNo 4 of 201512 November, 2015
GrenadaNo 20 of 201510 November, 2015
MontserratNo 15 of 201501 March, 2016
Saint Christopher (St Kitts) and NevisNo 1 of 201520 May, 2016
Saint LuciaNo 3 of 201512 November, 2015
Saint Vincent and the GrenadinesNo 4 of 2015 12 November, 2015
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ECCB@40 Commemorative Magazine