Vincent and the Grenadines, and two British Overseas Territories: Anguilla and Montserrat. 1 The ECCU include six independent states: Antigua and Barbuda, The Commonwealth of Dominica, Grenada, St. This paper uses bilateral net asset exposures in ECCU locally-incorporated banking system to analyze the risk of contagion or shock propagation among banks.
This, combined with robust deposit growth propelled excess liquidity in the banking sector. Limited availability of bankable projects, coupled with tight underwriting standards – a legacy of the GFC – has restrained credit growth. Provisioning, however, has remained insufficient. While well above the region’s tolerance limit of 5 percent, NPLs had declined significantly from the peak of 19 percent in mid-2014. At end-2017Q3, banks’ NPLs stood at 11 percent of total loans. While some foreign institutions are linked to the same parent entity, many banks are also interconnected through interbank lending.įollowing the global financial crisis (GFC), ECCU banks experienced substantial financial distress, as reflected by high non-performing loans. Moreover, ECCU commercial banks display significant linkages within- and across jurisdictions, partly driven by the joint operating environment within a single currency and a shared central bank. The Eastern Caribbean Currency Union (ECCU) financial system is large relative to the size of their economies, and is dominated by banks, with assets ranging from 100 to near 300 percent of GDP, depending on the jurisdiction.
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