Regional central banks agree to support new Caricom payment system at Kingston meeting

Regional central bank governors are giving support to a pilot programme for the Caricom payments and settlement system called CAPSS.

At the end of a two-day meeting hosted by the Bank of Jamaica from November 2-3, the central bankers “resolved to advance the work on intraregional payments” and in that regard have given their support to the CAPSS, which regional governments say will contribute to the achievement of the full integration of the national markets of the 15-member Caricom trading bloc into a single, unified and open market area.

CAPSS will utilise the technology underpinning PAPSS, the Pan-African Payments & Settlement System of the African Export-Import Bank.

The partnership was first disclosed by Afreximbank President and Chairman Professor Benedict Oramah, last week, while addressing the opening of the AfriCaribbean Trade and Investment Forum in Guyana.

Oramah said at the forum known as ACTIF23 that a payments and settlement programme with an African bank was been selected to run a pilot programme for Caricom central banks.

“We hope that very soon they payments systems for Africa and Caricom will be integrated,” he said at the event in Guyana.

Oramah recalled that he had addressed regional leaders earlier this year on assisting the region in establishing a Caricom Import-Export bank of which his bank would be a shareholder “if invited to”.

In a statement following the 61st Caricom Committee of Central Bank Governors on the weekend, the bankers said they reviewed the regional and global financial markets, macroeconomic environment, regional economic outlook and monetary policy.

“The regional economic performance assessment identified the key risks to macroeconomic stability in regional economies during the post-pandemic period, including high imported inflation, geopolitical developments and climate vulnerability. It concluded that the region has generally recovered from the pandemic with a return to growth and inflation that is trending downward, while the banking system remained sound.”

Last week’s meeting discussed several technical initiatives of the Committee of Central Bank Governors, which said in its statement that the regional technology risk management framework has been updated to include cyber-resilience principles and a cyber-incident response and recovery function.

Work is also continuing on the development of a regulatory framework on climate risk and green financing.

The central bank governors received and endorsed a proposal for the establishment of a Regional Central Bank Group of Reserves Managers, which will meet virtually and share experiences and approaches in the management of national reserves.

They also agreed to improve communications among the regional central banks, with Jamaica scheduled to host the next meeting of the communications network, and discussed experiences in implementing and using polymer banknotes and identified successes, challenges and other implications associated with the introduction, and agreed to continue sharing information at the operational level.

So far, the polymer banknotes have been introduced in Barbados, the Eastern Caribbean, Jamaica and Trinidad & Tobago.

Other matters discussed at the meeting included updates on continued vigilance in anti-money laundering surveillance and compliance, as well as further harmonisation of bank supervisory practices through cooperation and training.

“Many regional central banks have implemented elements of the Basel II framework, while some are also implementing the Basel III framework. Cybersecurity remains a major area of focus for regional central banks, which have increased collaboration, information sharing and training in areas including cloud policy frameworks and cloud adoption strategy, anti-phishing measures, and the development of a security framework for artificial intelligence solutions,” the statement said.

The meeting also reviewed the Caribbean central banks’ research programme for 2023-2025, and concluded that there was significant progress in the workstream focusing on climate change and climate-related risks. However, the bankers also noted that there was a need to step up the pace on research work relating to a regional macrofinancial policy and future paths to regional resilience.

The current chair of the Committee of Central Bank Governors is Richard Byles of Jamaica. Governor of the Central Bank of Barbados Dr Kevin Greenidge will assume the chair in 2024.