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Financial Stability

What is Financial Stability

Financial stability has been defined as the resilience of the financial system in the face of adverse shocks to enable the continued smooth functioning of the financial intermediation process. Effective financial intermediation, which involves the ability of households and businesses to channel savings into productive investments with confidence, is essential for sustained economic growth and the welfare of Trinidad and Tobago.

The Central Bank is aware that focusing on promoting the stability of each of its licensees individually (micro-prudential supervision) is insufficient to minimize the occurrence of domestic financial crises. Macro-prudential policy must also be employed; this focuses on controlling systemic risks in the financial system that can stem from each of the components of the financial system – financial institutions, financial markets and financial infrastructure or the indirect participants in the system – households, non-financial corporations, and the public sector.

This comprises a regime of risk management tools, including stress testing, to assess the risks and vulnerabilities of the financial system. In addition, the Central Bank, under the Central Bank Act, has the power to assume emergency control of any bank or insurance company, with a view to resolving any distress of the institution. The Central Bank can also act as lender of last resort for any distressed bank.

Financial Stability Objectives

To maintain confidence in, and promote the soundness and stability of, the financial system in Trinidad and Tobago.

To promote the existence of efficient and fair banking and financial services markets.

To maintain an appropriate level of protection for depositors, policyholders, and pension plan members.

To supervise all persons regulated by the Central Bank to determine whether they are in sound financial condition and in compliance with their respective legislation.

Financial Stability Committee

The Central Bank’s Financial Stability Committee (FSC) is responsible for devising policies and making appropriate recommendations for assessing and maintaining the stability of the financial system. The FSC is also responsible for the preparation and issuance of an annual Financial Stability Report.

Financial Stability Committee primary functions

identify, assess and manage threats to financial stability;
discuss and share pertinent information relating markets and financial market infrastructures;
discuss and coordinate on policy options related to the management of systemically important financial entities, and the general operations of the financial system; and
serve as the coordinating body for the implementation of the Framework for Resolution of Financial Institutions.

Financial Stability Committee Members

Dr. Alvin Hilaire

Governor and Chairman of the Board of Directors

Dr. Dorian Noel

Deputy Governor and Member of the Board of Directors

Mr. Patrick Solomon

Inspector of Financial Institutions

Mrs. Michelle Francis-Pantor

Deputy Inspector of Financial Institutions (Secretary)

Ms. Michelle Rollingston Pierre

Managing Director- Deposit Insurance Corporation

Ms. Lystra Lucillio

Deputy Chief Executive Officer, Trinidad and Tobago Securities and Exchange Commission

Financial Stability Support Committee (FSSC)

Terms of Reference of the FSSC are:

conducting targeted research activities as directed by the FSC
preparing technical and other documents and reports for the FSC meetings
assist the FSC in financial crisis management simulations
assist in developing functions to ensure crisis management plans can be effectively operationalized, if necessary
assist the FSC in identifying potential gaps in the legislative framework to maintain relevancy of the legislative framework for crisis management
performing such other functions / tasks as required by the Financial Stability Committee (FSC)

Supervisory Approach

How we supervise (Here the CBTT should elaborate on its approach to supervision of its regulated sectors i.e. its risk based supervisory approach; use of macroprudential and microprudential supervision etc). Draw info from current site: https://www.central-bank.org.tt/core-functions/supervision  

Consolidated Supervision
Supervisory Cooperation. (this should have a blurb indicate our powers and ability to cooperate and share information with other regulators – blurb should draw from https://www.central-bank.org.tt/core-functions/supervision, section on supervisory practices) and should include the MOUs we have signed with other regulators. In addition, where the authorities have issued joint statements etc those statements can be listed here.
- Enforcement
- Crisis Management