Financial Interconnectedness and Financial Sector Reforms in the Caribbean

Author/Editor: Sumiko Ogawa ; Joonkyu Park ; Diva Singh ; Nita Thacker
Publication Date: July 31, 2013
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: 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.
Series: Working Paper No. 13/175
Subject(s): Financial sector | Caribbean | Economic integration | Banks | Nonbank financial sector | Credit risk | Bank supervision | Bank reforms | Financial soundness indicators

Publication Date: July 31, 2013
ISBN/ISSN: 9781484307830/1018-5941 Format: Paper
Stock No: WPIEA2013175 Pages: 34
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