According to the objects and reasons, the Bill seeks to achieve several things. Firstly, it would facilitate a more effective and efficient supervision of financial institutions relating to safety and soundness of financial institutions and thereby ensure the soundness of the financial system.

In this regard, the Eastern Caribbean Central Bank would be empowered to get the minimum capital adequacy ratios for the financial institutions and to issue prudential guidelines on certain matters for the effective administration of the banking laws. The Central Bank would also be empowered to ascertain, by means of a through assessment of a person, whether that person is fit to properly hold the position of director or manager of a financial institution. In addition the Central Bank would be empowered to conduct the necessary supervision and examination of licensed financial institutions thereby enabling the Central Bank to take appropriate measures to minimise risk and to promote the safety and soundness of financial institutions.

Secondly, the Bill would enable the Central Bank to give approval to acquisition of shares in financial institutions. The early involvement of the Central Bank at the approval stage would seek to ensure that financial institutions are only owned by credible individuals and by institutions which are not so complex as to inhibit supervision.

Thirdly, the Bill seeks to place certain reporting obligations on financial institutions and also seeks to ensure that every financial institution has the appropriate management information system or systems that would allow the financial institutions to monitor banking activities and other activities of a financial nature. It will also set prudential limits to restrict exposure to single borrowers and groups of related borrowers.

Fourthly, the Bill seeks to facilitate the quick and effective liquidation and reorganization of financial institutions.

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