A release from the Premier’s Office while speaking to the recent live interest in the move to strengthen the banks in the East Caribbean Currency Union (ECCU), gives a brief lesson into the process of introducing and passing of legislation through the Legislative Assembly.
The release says, “On Tuesday, November 24 just past, the Government of Montserrat introduced the new EC uniform Banking Act into the Legislative Assembly, for its First Reading. There is now a period for further public input and then it will come up for its Second Reading, and will be debated in our Assembly. It then goes to Committee stage (so that our elected representatives can go through it point by point) and it will then be brought back for its Third Reading. At this stage a vote will be taken and it will be passed into law.”
The Bill referred to is the Banking Act which TMR has been reporting on since April this year, covering its passage in some of the other OECS states, leaving only Anguilla and Montserrat, to comply. (http://www.themontserratreporter.com/only-anguilla-and-montserrat-left-to-pass-eccb-banking-act/ and throughout the publication of November 13, 2015 – http://ww.themontserratreporter.com – and Facebook readers: https://www.facebook.com/The-Montserrat-Reporter-203080105851/
The Premier has been speaking on the issue which got the attention as noted in the issues noted at the TMR publications in print and online.
The Premier states: “The Bill has been under development for the past two years, having been begun under the Meade Administration. It was well advanced when the current government came into office in September 2014. Upon coming into office, the new administration initiated outreach to stakeholders, communicated feedback from our public and initiated discussions on points of concern with the Eastern Caribbean Central Bank and Currency Union.
“During the consultations held over the past six months and again over the past week or so, it has been clear that public concerns here in Montserrat are mainly about the impact of the provision in Section 44, that banks must have paid up capital of $ 20 millions in assets, four times the previously required $5 millions. Whilst, the Bank of Montserrat (which is in generally robust condition as a bank) currently has $ 8.5 millions. So, once the Act goes into effect, the Bank of Montserrat will have only four hundred and fifty (450) days to raise another EC$ 11.5 millions, or face crippling fines.
“In response to this concern, the Government of Montserrat as principal shareholder will be working with the Bank of Montserrat in reaching out to the Montserrat public, our diaspora and other potential investors to raise the required additional capital. In addition, the draft bill submitted to the Legislative Assembly for First Reading will allow Cabinet, after consultation with the ECCB, to take appropriate action in case of a problem with meeting the deadline. As recently as during last week, Premier Romeo has been in discussions with the other members of the ECCB Monetary Council, and such discussions are ongoing.
Other concerns expressed have raised questions as to whether the Banking Act puts too much unaccountable power in the hands of the ECCB.
Not so. For, first, the ECCB answers to a regional Monetary Council on which our Minister of Finance and Ministers from the other seven EC Dollar countries also sit. So, the ECCB and its Governor are answerable to the cabinets and parliaments of the EC Dollar region. The ECCB is controlled by our governments.
At the same time, the international standards set by the Basel Core Principles[1] for proper working of a central bank (based in key part on lessons learned from the 2008 – 2009 global crisis) are clear…”
Reports coming out of the critiqued ‘town hall forum’ to hear concerns from a wider public which included some persons who were among persons involved in earlier consultations. Presentations included a surprise expression from the Hon Speaker of the Assembly who threatened that she will not allow in ‘her house’ a rushed reading/passage of the ‘controversial’ bill.
Others who strongly opposed the Act, suggested that Montserrat (BoM) did not need the East Caribbean Currency Union going forward. One writer says:
“The new Eastern Caribbean Central Bank (ECCB) proposed Banking Act and discussions around it display our affliction with Knight blindness and our regional obsession with “Sirvitude”.
“The counter claim that the Bank of Montserrat is too small to succeed is cynical and denies the record. I believe that whatever the arguments for passing this new Banking Bill, it will not address any real problems of Montserrat’s banking.
It will for example give credibility to the phony case requiring a bank that has been working relatively well for over a decade to get an additional $12 million dollars in investment. .. This bill is likely to make things worse…”
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