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The Central Bank of Barbados in the country's capital, Bridgetown. (File photo)

New Bill to shake up governance of Central Bank of Barbados

The Central Bank of Barbados in the country's capital, Bridgetown. (File photo)

Barbados Minister in the Ministry of Finance, Ryan Straughn on Tuesday tabled legislation in that country’s Parliament which, he said, will improve the governance structure of the Central Bank of Barbados and ensure it is always well managed.

According to Straughn, the Central Bank of Barbados will play a critical role in how the Government reforms and transforms the way that things are done in Barbados over the next few years.

Minister in the Ministry of Finance Ryan Straughn at the Institute of Chartered Accountants of Barbados conference. (Photo: GIS Barbados)

“It is almost as if we are taking fresh guard to support the doing business environment going forward,” he stated.

The minister added that the Government had to preserve the independence of the central bank for it to continue operating effectively. In fact, he noted that the Mia Mottley Administration has already introduced strict conditions for the bank’s use of money to finance government, and the new legislation will further strengthen those conditions.

Appointment of the central bank governor and board

Among the significant changes that the new Bill will introduce is the appointment and tenure of the central bank governor, which is now six years; as well as that of the board.

Straughn explained that traditionally when governments change, the directors of boards of institutions would offer their resignation.

Mia Mottley Administration has already introduced strict conditions for the bank’s use of money to finance Government. (File photo)

“We have a slightly different structure where there will be staggering of appointment of directors, so that every year, a director will be appointed for a term — whether one or two years — as opposed to having all of them appointed at the same time,” he stated.

“When we came into office in 2018, we didn’t dismiss the entire board of directors across the State-owned enterprises; instead we deliberately kept persons appointed to the previous boards to ensure the incoming board of directors would have somebody with some institutional knowledge in order to facilitate better decision-making. We thought that was important because if the Government is to work properly, then you need a measure of continuity, especially in the context of the Central Bank, because the process of replacement of directors has to be carefully managed,” he stressed.

Restoring public trust

In the past, the minister of finance had the authority to fire the governor of the Central Bank of Barbados. However, Straughn explained that, based on a new provision in the Bill, if the minister of finance wishes to relieve the governor of his duties, the minister must solicit the support of the governor general or head of State to effect the dismissal.

The current Governor of the Central Bank of Barbados Cleviston Haynes
(Photo: Barbados Advocate)

“That is a critical provision, so there is a double veto mechanism in place…” he noted.

Straughn said, too, there was a time when the governor’s advice to the public — for example, whether to save or tighten their belts — carried weight and, generally speaking, the public would adhere to such advice. With this in mind, the finance minister is of the view that the new Central Bank Bill will assist in restoring the public’s trust and confidence in the institution.