The fallout from last month's survey by the Financial Stablility Forum (FSF), in which financial offshore centres were grouped into three categories according to their perceived quality of supervision and degree of co-operation, continues unabated and this week the FSF report reared its head again at the Annual General Meeting of the Bank for International Settlements in Basle, Switzerland. The AGM was attended by the Governors and other representatives of member central banks and other central banks associated with the BIS as well as representatives of many international institutions.
Amongst those at the AGM were central bankers from the Caribbean region, who stressed that they are ready to fight unfavourable ratings from the FSF which cast doubt on their efforts to improve supervision. The Bahamas, in particular, are incensed at being placed in Group 3 of the FSF survey, along with the Netherlands Antilles, Aruba, the British Virgin Islands and the Caymans.
Julian Francis, governor of the Central Bank of the Bahamas, said at the AGM 'We feel quite offended by this. It has not been at all fair.
We hope that the Financial Stability Forum will understand that Bahamas does wish to be perfectly cooperative and serious about it... We just wish that they would approach it themselves in that way.'
Since the publication of the FSF report on 26 May, monetary officials from key offshore centres, both within and outside the Caribbean, have objected to their rating among the approximately 20 centres deemed to lack proper legal or supervisory practices, or who do not co-operate well internationally.
Indeed, such is the furore generated by the report that several of the Caribbean centres met informally in Basle ahead of the BIS AGM.
Anthony Caram, governor of the central bank of Aruba, said 'We had a meeting and we expressed our concerns about the decision to put all the Caribbean countries in the lowest ranked group. We just discussed it informally, and we have to wait to see what the reaction will be. At this moment, the matter is being reevaluated, and the purpose is to examine all countries once again and to look if they are properly classsified.'
Some offshore centres fear that those big countries conducting the ratings are operating partly out of fear of competition from smaller banking centres. Even Switzerland has accused the FSF of making an arbitrary distinction between "onshore" and "offshore" centres given the global nature of finance.
The FSF has also faced suggestions that the final rankings issued may have been down to politics, at least in part. Svein Andresen, head of the secretariat of the FSF, vehemently denies politics taking a role, saying 'it's not politically motivated at all. I think the report stands on its own.' Whatever the findings of the FSF and the motivation behind them, one thing that is certain is that the offshore jurisdictions categorised unfavourably, and not just those in the Caribbean, will fight to prove the FSF wrong.
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