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PB2021-005 Financial Sector Reform Program Curacao and St Maarten

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Press Release 2021-005

Willemstad/Philipsburg – As part of its efforts to strengthen the resilience of the financial sector, the Centrale Bank van Curaçao en Sint-Maarten (CBCS) has developed a comprehensive reform package. In the analysis and design of the reform program the authorities benefited from technical assistance provided by the International Monetary Fund. 

“The reform plan cuts across multiple functional areas of the CBCS, and seeks to further strengthen its analytical capacity in the area of financial stability and systemic risk analysis; enhance supervisory scrutiny; and buttress the financial sector safety net”, said CBCS President Richard Doornbosch. To strengthen prudential supervision, at the outset mainly in the areas of liquidity and credit risk management, the CBCS is conducting thematic investigations into the liquidity-position monitoring practices and quality of liquidity-risk management of the financial institutions. Furthermore, the CBCS has planned investigations into the quality of the institutions’ loans and investments, to be carried out once the longterm economic and financial impact of the COVID-19 pandemic can be more reliably estimated.

The analysis has also revealed the need for legislative and regulatory reforms in the areas of intervention, enforcement, and resolution. Mr. Doornbosch emphasized that such changes are essential to expand the instruments available to the CBCS, but also to improve the efficacy of its interventions. In addition, the IMF underlines the importance of having a more data-driven and intrusive approach to supervision together with stronger efforts to improve the formal governance structures of the supervised institutions and greater attention to the long-term viability of certain business models. One key issue among these is the quality of the data the CBCS receives to carry out its supervisory role, which, as a matter of priority, requires improvement in a number of areas.

Finally, also considered was the initiation and institutionalization of a structured dialogue between the CBCS and the Ministry of Finance, which would enable more effective coordination on issues pertaining to financial stability and, more specifically, crisis management. A formalized dialogue is to be preferred, as it would ensure that both parties are informed about any (potential) financial stability risks. Such a regular dialogue would also provide for informing the government about policy (change) proposals and mobilize support for necessary financial sector reforms, with the aim to minimize potential losses to taxpayers should stresses in the financial sector materialize. “The establishment of a financial stability committee is therefore strongly recommended,” said Mr. Doornbosch.

The CBCS’s financial sector reform program can be found on the CBCS website via: https://www.centralbank.cw/functions/financial-stability/reports.

Willemstad, April 13, 2021


Last updated: 15.05.2024 11:05