PHILIPSBURG–The Central Bank of Curaçao and St. Maarten (CBCS) will look into the relatively new practice by some commercial banks of not cashing each other’s cheques.
The Central Bank does not have an existing policy tying commercial banks to not to taking outside cheques.
CBCS Financial Economic Director José Jardim pointed out to Parliament’s Permanent Committee on Finance on Wednesday, the establishment of a fair trade authority would be productive in tackling issues such as the one with cheques. In the absence of such, the Central Bank will look in to what is the reason for this practice.
Several Members of Parliament (MPs) raised the cheque issue after approached by residents about the hurdles they face to access their money whether cheque barring on increasingly high fees. The tackling of growing fees is also something for a fair trade authority to tackle, said Jardim.
Finance Minister Perry Geerlings also agreed with the need for the establishment of a fair trade authority.
The call to bank and insurance clients to report hurdles encountered to the Central Bank still stands. The bottleneck for the Central Bank is under the current legislation the complaint can only be acknowledged; the result cannot be shared with the client who made the complaint. This scenario leaves many feeling nothing is done, said Jardim. He urged Parliament to look at the law to better service the community.
Tackling under-insurance via education and awareness is on the CBCS’ agenda. Under-issuance has been described as a second hurricane to strike St. Maarten after Hurricane Irma a year ago. Many residents are still struggling to rebuild their homes after discovering their insurance premiums were up to date, but the amount they were insured for was grossly under estimated.
Efforts are on the way at the Central Bank to formulate guidelines about under-insurance.
Overall recovery of the economy is at a standstill with the economic contraction still standing at some eight per cent compared to previous years. “There is no indication the economy is recovering,” said Jardim. This is expected after devastation such as caused by Irma.
The economy “cannot recover in a matter of months” from such a blow, he added. The rapid reopening of Princess Juliana International Airport and large hotel properties will jolt the speed of recovery.
CBCS Director-Secretary Leila Matroos-Lasten said the Central Bank was recently informed by United States authority that that country is ready to launch a pilot project related to correspondent banking with Curaçao and St. Maarten. This, however, will require the appointment of supervisory board members and a permanent president of the bank.
The pilot programme related to correspondent banking will seek to make the cumbersome banking guidelines and reporting more streamlined.
Asked about the CBCS’ openness to innovation, Matroos-Lasten said there needs to be some stepping up to embrace innovation. However, embracing is not only being opened minded, it requires legislation to expand the Central Bank’s supervisory role.
The lengthy process to open a bank account is related to correspondent banking; however, some banks do ask for additional documents. The Central Bank will seek out whether these additions are necessary. The Central Bank does not have the authority to tell commercial banks want documents they can or cannot request from a (potential) client, it can only monitor the situation to see if what is requested is necessary.
One area in which legislation is required relates to accepting and supervising digital currency. The CBCS has commissioned a study on the possible establishment of a digital guilder that is tied one-to-one with the existing paper guilder.
Crypto-currencies are not rejected outright by the Central Bank. Matroos-Lasten told MPs that as long as the institution offering the currency fits within existing legislation and can handle the risk properly the currency could be allowed. However, the Central Bank has not taken a direct stance as yet.
The wide-spread knowledge of the population about crypto currency and its risks will play a major role in the Central Bank’s eventual stance.
MPs were also concerned about the ongoing supervision and solvency of the ENNIA Group. Jardim said the Central Bank “sees a future” for Ennia and recommended investors take ENNIA seriously.
Wednesday’s permanent committee meeting, chaired by MP Ardwell Irion, was called to discuss CBCS’ role in the aftermath of Irma. The measures and steps taken by CBCS were outlined to MPs by Senior Banking Supervisor Eirka de Windt and included allowing credit institutions to grant moratorium on principal and interest payments to clients experiencing repayment problems.
Source: The Daily Herald https://www.thedailyherald.sx/islands/79829-cbcs-to-investigate-non-cashing-of-cheques-by-commercial-banks
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