MAHO–The 2008-2009 financial meltdown taught the commercial financial sector valuable lessons as it did the monetary regulators – the Central Banks of countries around the world. Now, almost a decade after the financial upheavals, the Central Banks have had to take in “undue burdens” to ensure history does not repeat itself, according to President of the Central Bank of Curaçao and St. Maarten (CBCS) Dr. Emsley Tromp.
Tromp was speaking at the opening of a two-day conference, hosted by CBCS, themed “Central Banking after the Financial Crisis.” The conference opened in Sonesta Maho Beach Resort and Casino on Thursday morning, and will culminate today, Friday, with two public sessions in the resort about the role and responsibilities of the Central Bank.
CBCS was described by Tromp as an “integral institution” in fostering economic progress for the growing countries it represents – Curacao and St. Maarten. It is in this framework that the conference was organized, as well as a way to present information to contribute to “good discussions” in the communities about the pros and cons of monetary unions, and to zoom in on behavioural economics and its impact on spending, among other topics.
Finance Minister Richard Gibson told the gathering of people from the gamut of the financial field, that 2016 has been “a year of fiscal firsts” for St. Maarten, starting with “its first realistic and balanced budget.” He described this “achievement as “a gigantic step” for the country for this year and beyond.
Gibson also talked about his plans to establish a national development bank that will not only be an advisory body, but one that will actively take part in the country’s growth and progress.
That bank will be “sustainable and social responsible” to the community, and it will be “one more institution to set St. Maarten on its course” infrastructure-wise and through investment in its people, said Gibson.
Within the scope of the monetary union, Gibson said he will be urging Parliament to work on approval of the financial harmonization laws. These amendments will result in prudent financial supervision in the union, and increase investor confidence in the financial sector, he said.
Following on the heels of Gibson’s classification of Eastern Caribbean Central Bank (ECCB) as “a living example of a working monetary union” was a presentation about ECCB by its Deputy Director Trevor Braithwaite. He informed the gathering about the history, challenges and successes of ECCB over its 30-year history. One success is the pegging of the Eastern Caribbean dollar to the United States dollar at EC $2.70 to US $1 for the past decades.
Braithwaite also shared how challenging it is to come to consensus on bank matters, when the union comprises eight countries. All countries must collectively decide on policy and direction. In the local context, only two countries – St. Maarten and Curacao, have to make decisions related to CBCS.
The working conference sessions include presentations from experts in the financial fields from the Caribbean and international organizations, such as the International Monetary Fund (IMF).
In the evening, Prime Minister William Marlin spoke to delegates at the conference dinner at the resort. He applauded CBCS’ move to host a public session on its responsibilities and role in the community, saying it was “a positive step in the right direction”.
“Fact is, if we were to measure the level of financial literacy of our people, including several in authority, we would not qualify to even be in the Banking Kindergarten. But take heart. We are certainly not alone,” said Marlin, pointing out that such an observation has been made in other countries, including the United States.
Giving insight about St. Maarten’s financial planning, Marlin said similar to most countries, St. Maarten will have to take measures related to the health care and pension systems to reduce their burden on the public budget and make them financially sustainable. “However, we are aware that the tourism sector is very vulnerable to external shocks, particularly given its high dependence on the North American market,” he said.
“An average annual growth of 0.9 per cent is not sufficient to improve the well-being of every St. Maarten citizen. To achieve a higher growth path, we need to invest in the economy. Both public and private investments are necessary,” Marlin said.
He called on the financial sector “to support more proactively important investment projects in St. Maarten that will enhance our growth prospects.”
To improve the well-being of the people, Marlin said economic growth must be inclusive. “We should aim not only at achieving higher growth figures, but also that growth should translate into less poverty and inequality.”
One barrier to growth is a high youth unemployment rate, and to tackle this, Marlin said, Government plans to introduce an active labour market programme, in close collaboration with the private sector, to provide a quick employment solution for young people. The youngsters in the programme will be placed in a job that aligns best with their specific set of skills, abilities, and personal characteristics and interests. At the same time, they will receive life-skills training. They will be enrolled in a compulsory savings plan to teach them the value of money and saving for the future.
Marlin, like Gibson, applauded CBCS for choosing to hold its first major conference in St. Maarten.
Source: The Daily Herald CBCS conference zooms in on banking after financial crisis