ECCB looking at financing role

The Eastern Caribbean Central Bank (ECCB) is contemplating new ways to help member countries further economic development, including, for the first time, using bank reserves to finance projects.
ECCB Governor Timothy Antoine made the announcement on Tuesday at the launch of the institution’s 2017-2021 Strategic Plan.
“We are going to consider the deployment of a limited portion of reserves to finance transformation initiatives for growth and competitiveness,” Antoine said. “We recognise that beyond advice and advocacy the central bank may have a role for financing in very selective cases and that’s something we’re going to consider and that’s why it’s in our strategic plan.”
Pre-empting any concern about the legality of the move the governor highlighted Article 42 of the Eastern Caribbean Central Bank Agreement Act which made provision for such actions.
The relevant section reads: “The Bank may, with the approval of the Council, administer or participate in corporation or schemes established for the purpose of … financing economic development of the territories of Participating Governments.”
According to Antoine, the law would be applied “very carefully”.
“We’ve actually started some internal work on that,” he added.
The role of financier would represent a new development for the ECCB which has as its primary objective the maintenance of the stability of the EC dollar and the integrity of the banking system.
Meanwhile, Antoine also highlighted plans to establish a partial credit guarantee scheme to expand access to the financing of Micro, Small and Medium Enterprises (MSMEs).
“We recognise in our region as we move around the issue of access to credit. People tell you they have a good business idea but they can’t get access; the banks deem them too risky, they have no collateral, they have no track record, whatever the issues and we have to solve for that.
“And part of the solution, and I say part, not the full solution, is the establishment of a partial credit guarantee scheme. As we speak, several of our governments have now passed this law; about five have passed it.”
Antigua & Barbuda earlier this year passed the Eastern Caribbean Partial Credit Guarantee Corporation Agreement Act. The eight participating countries in the ECCB would be expected to contribute to the eventual scheme.
Financial institutions, mainly commercial banks and credit unions, will apply to the corporation to become participatory members of the scheme, and will in turn be bound by the terms of the credit guarantee programme.