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Finance minister appoints Financial Deepening Implementation Group

Thursday, November 15, 2018

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KINGSTON, Jamaica — Minister of Finance and the Public Service, Dr Nigel Clarke, today announced the establishment of the Financial Deepening Implementation Group, an interagency group including Bank of Jamaica (BoJ), Development Bank of Jamaica, the Jamaica Stock Exchange and the Financial Services Commission to advance Jamaica's financial deepening agenda.

A release from Clarke's ministry said that the BoJ was tasked with leading the development and implementation of a financial deepening agenda in order to maximise the opportunities created by the high Jamaican dollar liquidity conditions as the Government continues to pay down its debts.

To support this process, BoJ retained Jamaican David Marston, a global expert and former senior IMF official, in April 2018 to develop recommendations on how to advance financial deepening in the near and medium term, the ministry said.

Clarke noted that, “leveraging Mr Marston's valuable global insight on financial markets and financial technology, with his intimate knowledge of the Jamaican economy, provides an opportunity to develop actionable policies and legislative reforms that can transform Jamaica's financial sector into a regional financial Mecca.”

Following the consultations, the key elements of immediate focus of the financial deepening agenda will revolve around:

1. Accelerating access to finance through: (a) building out the ecosystem (regulatory and technology platform) to facilitate the factoring of receivables, allowing small and medium-sized enterprises (SMEs) to receive financing in days rather than months and providing an alternative to traditional collateral-based financing; and (b) leveraging the use of financial technology (Fintech) and the fact that the penetration of mobile phones in Jamaica is 110 per cent (leading the Caribbean) to provide a wider range of financial services to Jamaicans at significantly lower cost.

2. Accelerating the creation of investible domestic assets through broadening the investment opportunities associated with the Government's privatisation programme to include modalities that arise from the business strategies of some public agencies where income streams could be securitised to support capital investment projects to provide new infrastructure capacity and employment opportunities.

3. Standardising asset quality for sound investments and reducing arbitrage through: (a) a programme to have independent ratings of issuers of domestic assets to support the transition from zero risk-rated Government issues to non-Government assets, that would also support prudent investment by investors as they search for yield; and (b) regulators agreeing on a path to converge foreign exchange investment limits between deposit-taking institutions and non-deposit-taking institutions, which is currently an incentive for regulatory arbitrage within financial groups.

4. Increasing transparency and price discovery in markets through: (a) reforming the prudential framework for liquidity management by deposit-taking institutions; and (b) strengthening the trading microstructures at BoJ and the Jamaica Stock Exchange.

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