Credit Unions which operate within the Eastern Caribbean Currency Union (ECCU) will not be affected by the New Banking Bill which is being passed in the Eastern Caribbean Central Bank (ECCB) member countries.
The ECCB Monetary Council, at its 81st meeting held on 24 February 2015, agreed to the passage of a new Banking Bill in the eight ECCB member countries.
The implementation of the proposed Banking Bill was viewed as an urgent requirement to address the issues affecting the ECCU banking sector and to maintain the integrity and stability of the system. The Bill also provides for greater protection of depositors.
The ECCB Agreement Act 1983 grants the ECCB power to regulate banking business on behalf of and in collaboration with its member governments. The Bill therefore grants the ECCB regulatory and supervisory oversight for commercial banks and credit institutions which carry on the business of banking in the ECCU. On the basis of this mandate, the proposed Banking Bill provides for the regulation of banking business.
The Banking Bill defines banking business as the business of receiving funds through:
1. the acceptance of monetary deposits which are repayable on demand or after notice or any similar operation; and
2. the frequent sale or placement of bonds, certificates, notes or other securities, and the use of such funds either in whole or in part for extensions of credit or investment for the account and at the risk of the person doing such business.
Banking business is also defined as any other activity recognised by the Central Bank as banking practice and which a licensed financial institution may additionally be authorised to do.
Credit unions conduct business of a financial nature but they do not conduct banking business, and are therefore not regulated by the ECCB under the existing Banking Act and will not be regulated under the proposed Banking Bill.
Credit Unions are regulated by the single regulatory units in individual ECCU countries under the Cooperative Societies Act.
ECCU member countries are Anguilla, Antigua and Barbuda, Commonwealth of Dominica, Grenada, Montserrat, St Kitts and Nevis, Saint Lucia and St Vincent and the Grenadines.
Five years ago P.M. Skerrit “renewed calls to the Eastern Caribbean Monetary Council to urgently regulate credit unions in the Monetary Union”, in order to ensure that our monies are not put at risk, as per DNO of 26 May 2010. I kept the article as it rang alarm bells in my head. At the time I was convinced our Minister of Finance had his eyes on Credit Unions’ liquidity to ease his government’s cashflow. I am glad the ECMC have seen sense and found that it is not necessary to regulate our credit unions in that way. As they have said, the credit unions are not in the (commercial) banking business as would be a NBD and to be frank I have more trust in my credit union than I do have in the former.