Financial Interconnectedness and Financial Sector Reforms in the Caribbean

Sumiko Ogawa, Joonkyu Park, Diva Singh and Nita Thacker

No 2013/175, IMF Working Papers from International Monetary Fund

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: WP; credit risk; financial system; parent bank support; resolution framework; problem bank; financial interconnectedness; financial sector in the Caribbean region; regulatory and supervision system; loan portfolio; market share; bank sector; BIS data; ECCU country; banking sector assets; systematic bank resolution framework; Latin American bank; ECCU's banking sector; liquid bank; Commercial banks; Financial contagion; Credit bureaus; Insurance companies; Caribbean; Global (search for similar items in EconPapers)
Pages: 34
Date: 2013-07-31
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Citations: View citations in EconPapers (5)

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