Loss of Correspondent Banking Relationships in the Caribbean: Trends, Impact, and Policy Options

Abstract

Banks across the Caribbean have lost important Correspondent Banking Relationships (CBRs). The macroeconomic impact has so far been limited, in part because banks either have multiple relationships or have been successful in replacing lost CBRs. However, the cost of services has increased substantially, some services have been cut back, and some sectors have experienced reduced access. Policy options to address multiple drivers, including lower profitability and risk aversion by global banks, require tailored actions by several stakeholders.

Keywords: Dominica, Dominican Republic, Antigua and Barbuda, Asia and Pacific, Bahamas, The, Barbados, Small states, Grenada, Haiti, Western Hemisphere, Caribbean, Jamaica, Tax evasion, Trinidad and Tobago, Remittances, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Central banks and their policies, corrrespondent banking, AML/CFT, fintech, Government Policy and Regulation, Technological Change: Choices and Consequences

JEL Classification: E58, G21, G28, H26, O33, O54, G23