Financial sector responds to independence of Bank of JamaicaWednesday, April 21, 2021
BY DAVID ROSE
The Business Observer sought responses from members of the financial sector on the independence of the country's central bank from government control.
Published below are some of these responses.
Jerome Smalling – President
The independence of the Bank of Jamaica will improve the profile of the financial sector and our reputation on the international financial markets. The separation of objectives resulting from the new dispensation will also assist Jamaica in developing a mature financial sector without the perception of political interference. The Bank of Jamaica is afforded the freedom to manage the monetary policies in its effort to establish and maintain macro-economic stability inclusive of a stable inflation environment. The major function of providing oversight to the financial sector will also be enhanced through policy based guidelines and regulations.
SEPTIMUS BLAKE – Chief Executive Office National Commercial Bank
Although dynamism has increased in recent years, Jamaica's financial sector still lacks the depth and breadth to meet the needs of all Jamaican firms, and individuals. This in spite of the fact that Bank of Jamaica reforms and other financial sector regulatory reforms in the last few years have already led to Jamaica possessing an advanced standard of financial governance with robust financial sector institutions (banks, insurance companies, insurance intermediaries, securities dealers, investment advisors, credit unions, cambios, microfinance lenders, etc).
BOJ independence will lead to greater financial deepening because BOJ will focus on improving the transmission mechanism for monetary policy. Financial deepening means a more competitive, resilient, dynamic and adaptable financial ecosystem that provides a greater variety of financial services to a much greater proportion of the population than is now being served by the financial sector.
The clarity and transparency brought by the new inflation targeting framework will reduce medium and long-term inflation uncertainty and interest rate risk thereby lowering long-term interest rates. Lower long-term interest rates increase the viability of investments and can therefore be expected to boost private sector investment in all sectors of the economy, thereby creating jobs and improving the standard of living in Jamaica.
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