What is the Central Bank of Barbados (CBB)? Central Bank of Barbados (CBB) Review, Features

The Central Bank of Barbados (CBB) was established in May 1972 by the Government of Barbados to accelerate the pace of economic development in the country. Today, the Bank is the country’s premier financial institution, with its primary policy being to formulate monetary and fiscal policies in conjunction with the government to assist in the country’s economic development programmes.

About the Central Bank of Barbados (CBB)

• Central Bank of Barbados (CBB) Prior to 1972, the Eastern Caribbean Currency Authority (ECCA) was the body responsible for managing the monetary affairs of most of the small Eastern Caribbean countries, including Barbados.
• However, ECCAS does not regulate financial institutions and, as it has responsibilities for some territories, there is no guarantee that ECCAS policies are acceptable or appropriate for every jurisdiction. This paved the way for the establishment of the Central Bank of Barbados (CBB). Furthermore, the establishment of the Central Bank of Barbados (CBB) was seen as key to accelerating the pace of economic development in Barbados in the post-independence era.

Functions of the Central Bank of Barbados (CBB)

In order to successfully implement its policies and achieve its objectives, the central bank performs the following functions:

• Determine and implement monetary policy
• Implementing exchange rate management policies
• Holds and manages all of Barbados' official international reserves
• Issuing and managing currency
• Acting as a lender of last resort for financial institutions
• Collect and compile economic and financial statistics
• Regulate and promote safe, sound and efficient payment and settlement systems
• Adopt and implement macroprudential policy measures to promote financial stability
• Acting as a prudential regulator under Chapter 324a of the Financial Institutions Act
• Acting as fiscal agent and financial advisor to the government
• Carry out any ancillary activities related to the exercise of functions under this Act

The role of banking supervision

The Central Bank of Barbados (CBB) has a secondary objective, after maintaining the value of the currency, to promote financial stability in Barbados and in accordance with this objective, one of the functions of the Central Bank of Barbados is to act as a prudential regulator under the Financial Institutions Act (Chapter 324A).

The Central Bank of Barbados (CBB) has regulatory responsibility for:

• Commercial Banks
• Commercial banks, trusts and finance companies
• Money or value transfer service providers
• Foreign Currency Income Bank
• Credit reporting agencies

These institutions provide financing to commercial entities, basic financial services to the general public, payment systems, and credit reporting. These entities are highly regulated because the failure of a financial institution or payment service could undermine the stability and integrity of the financial system.

As a regulatory body, the Central Bank of Barbados (CBB) has the following functions:

• Administering laws and regulations related to financial institutions to determine if any violations have occurred;
• Determine the financial condition of a licensed financial institution, whether its banking operations are sound, and whether all risks in the entity are being effectively managed;
• Verify the accuracy of statutory and prudential returns of licensed financial institutions;
• Propose suggestions for improvement where deficiencies are found;
• Issuing licenses to new applicants and processing non-licensed applications under the Financial Institutions Act (Chapter 324A) and the Fair Credit Reporting Act 2021;
• research and develop policy on emerging regulatory and supervisory issues;
• Assisting in drafting legislation related to regulatory/supervisory issues, e.g. money laundering, fintech;
• Maintain collaboration with other local, regional and international oversight bodies to assist in integrated global oversight efforts.

The Central Bank of Barbados (CBB) continuously monitors the operations and activities of licensees through weekly, monthly, quarterly and annual reviews and analysis of off-site (i.e. not at the licensee’s premises) and submitted statutory, prudential and qualitative information. It also assesses the risk management quality of operations as well as capital adequacy and other measures. This monitoring helps identify key activities and risk areas that require on-site assessment.

Conduct on-site reviews (at the licensee's premises) as necessary to facilitate a review of risks indicated by risk-based monitoring. This may include certain "light touch" or "in-depth" assessments of the robustness of the institution's practices and procedures. As these assessments address significant risk areas, including the entity's compliance with laws and regulations, some institutions may require more frequent visits due to their size and complexity.