During his presentation of the 2003/2004 Budget to the House of Assembly on Wednesday, Prime Minister Perry Christie said despite the upheavals of the past two years, financial services continue to represent the second largest sector of the Bahamian economy, with contribution to GDP estimated at 15%. He pointed out, *”The sector provides some of the highest paying jobs, and growth opportunities for a number of associated sectors including the legal and accounting professions.”*
Recapping developments within the sector during the 2002/2003 fiscal year, the Prime Minister said efforts to enhance the competitiveness of the financial services sector focused on a number of important areas, including:-
· the establishment of the Financial Services Consultative Forum, which has primary responsibility to make recommendations on those products and services which will enhance the competitiveness of The Bahamas in the international business arena.
. an intensified focus on the development of the domestic capital markets.
· the pursuit of initiatives to modernise the domestic payments system.
· the implementation of the on-line integrated Registered Agent System in the Registrar General’s Department that allows for on-line incorporation of International Business Companies, and filing of relevant documents.
· measures aimed at streamlining and simplifying compliance procedures and eliminating overlap and duplication of effort by the regulatory authorities (this approach is intended to strengthen compliance procedures while eliminating unnecessary costs on the institutions subject to regulation).
On the last, he pointed out that these measures will be implemented in the near term after necessary consultations and necessary adjustments to the regulatory framework have been completed.
**Coordination and Cooperation of Regulators**
Of particular note during the preceding fiscal year was the progress made to strengthen cooperation and the coordination of activities among the various Bahamian supervisory agencies.
The Prime Minister pointed to the Memorandum of Understanding (MOU) signed last fall between the Central Bank, the Registrar of Insurance Companies, the Bahamas Compliance Commission, the Securities Commission, and the Inspector of Financial and Corporate Service Providers. Reportedly, within the framework of the MOU, joint on-site examinations have begun already for licensees supervised by more than one agency. From the regulators’ perspective, the benefit of such an arrangement is that it reduces total supervisory costs. Additionally, for those financial institutions that answer to multiple supervisory agencies, it lowers compliance costs and minimises duplication of efforts.
While recognising that additional progress can be made in fine tuning the financial sector regulatory regime, the Government remains mindful, however, that this regime must remain credible in the eyes of the international community and in conformity with international standards. *”At the same time, we must maintain a balance between costs of regulations, as they affect our international competitiveness, and benefits derived otherwise from them,”* said Prime Minister Christie.
The Bahamas is a significant participant in the provision of international business and financial services and, as such, has given great priority to information exchange and cooperation with foreign authorities as part of the global effort to stem the illicit use of financial services for money laundering and other forms of criminality. Nevertheless, this responsibility is discharged in a manner that preserves confidentiality for legitimate business activities.
The Prime Minister concluded that experience has shown that the “consultative approach” to the development of financial sector regulations is a key element in meeting the Government’s objectives. He affirmed that it is a practice to which his Government will continue to adhere.
The mandate of the Financial Services Consultative Forum, established late last year, is *”to facilitate structured and continuous dialogue between the government and the private sector so that legislative and promotional strategies aimed at repositioning the financial services industry to better meet the needs of international financial markets can be conceived and implemented within a framework of collaborative effort.”*