Financial Interconnectedness and Financial Sector Reforms in the Caribbean

35 Pages Posted: 29 Aug 2013

See all articles by Sumiko Ogawa

Sumiko Ogawa

International Monetary Fund (IMF)

Joonkyu Park

International Monetary Fund (IMF)

Diva Singh

International Monetary Fund (IMF)

Nita Thacker

International Monetary Fund (IMF)

Date Written: July 2013

Abstract

Financial sector linkages have increased continuously in the Caribbean with cross border capital flows and financial conglomerates dominating the financial system. While the greater interconnectedness can heighten systemic risks and likelihood of contagion, it can have positive impacts provided the regional authorities take steps to prevent the systemic risk. In this context, financial sector reform measures aimed at bolstering and harmonizing prudential regulations in line with international best practices, the strengthening and enhancement of financial sector supervision to include cross border linkages through consolidated supervision, increased cooperation across supervisors in the region, and the establishment of deposit insurance and crisis resolution frameworks will be critical to maintain financial sector stability and minimize the repercussions of any negative shocks.

Keywords: Financial sector, Caribbean, Economic integration, Banks, Nonbank financial sector, Credit risk, Bank supervision, Bank reforms, Financial soundness indicators, financial interconnectedness, financial sector in the Caribbean region, regulatory and supervision system

JEL Classification: F36, G21, G22, G23, G28

Suggested Citation

Ogawa, Sumiko and Park, Joonkyu and Singh, Diva and Thacker, Nita, Financial Interconnectedness and Financial Sector Reforms in the Caribbean (July 2013). IMF Working Paper No. 13/175, Available at SSRN: https://ssrn.com/abstract=2317692

Sumiko Ogawa (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Joonkyu Park

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Diva Singh

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Nita Thacker

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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