Financial System

The Central Bank stands at the centre of the local financial system and is charged with the responsibility to promote and maintain financial system stability. To achieve this objective, the Bank supervises the activities of deposit taking entities as provided for under Section 34A of the Bank of Jamaica Act, as well as provides regulatory oversight for foreign exchange traders and remittance companies under Section 22B and Section 22G(2) of the Bank of Jamaica (BOJ) Act, respectively. In addition, the Bank seeks to promote the development of the local financial markets, and regulates and supports the major clearing and settlement systems through which financial institutions execute the transfer of funds for a range of financial transactions. The safety and efficiency of these payment systems are therefore critical objectives of public policy. The Bank of Jamaica is also designated as the Supervisory Authority under the Credit Reporting Act, 2010.

Also operating within the financial system is a mix of non-deposit taking financial institutions that fall directly under the regulatory oversight of the Financial Services Commission.

Financial Institutions and/or Services Supervised by the Bank of Jamaica are :

Deposit-taking institutions2 licensed under the Banking Services Act :

Commercial Banks
Designation of BOJ Primary Dealer
Merchant Banks and Finance Houses
Building Societies

Money Services Businesses:

Cambios
Bureaux de Change
Remittance Companies

Credit Bureaus

Financial institutions and/or services supervised by the Financial Services Commission:

Insurance
Securities Firms/Dealers 3
Unit Trusts
Private Pension Funds
Mutual Funds

Notes:
   
1

The Banking Services Act (BSA) was passed in June 2014 and came into effect on 30 September 2015. The BSA repealed the former Banking Act, The Financial Institutions Act and The Bank of Jamaica (Building Societies) Regulations. All deposit-taking institutions licensed under the BSA, are also licensed to act as ‘Authorized Foreign Exchange Dealers allowing them to buy, sell and deal in foreign currencies inclusive of the taking of deposits and making loans in foreign currency.
2

The Credit Reporting Act was passed in August 2010 and came into effect on 1 October 2010. The Credit Reporting Regulations which, operationalise the Act, and specifies matters pertaining to the licensing process such as the form of application, documentation requirements and licensing fees, were approved by Parliament and gazetted subsequent to year end. The Bank of Jamaica is the designated supervising authority under the Act and is responsible for reviewing and recommending on applications for license to the Minister of Finance and maintaining general supervisory oversight of the operations of credit bureau.
   
3

Of the group of Securities Dealers, the BOJ has designated 9 of these institutions as ‘ BOJ Primary Dealers' which provide access to BOJ's Open Market Operations Instruments and GOJ instruments in the primary and secondary markets. These entities must simultaneously satisfy the requirements of their regulator, the Financial Services Commission; and the specific BOJ requirements for Primary Dealers to be designated as such.

   
4

Credit Unions (operating under the Co-operative Society Act)

 

While the supervisory framework for commercial banks, merchant banks and building societies are well established in their governing legislation, credit unions were more recently designated by the Minister of Finance as ‘specified financial institutions’ under the Bank of Jamaica Act, enabling the Bank to obtain information on their operations.  Regulations to establish a formal supervisory framework for these entities inclusive of a licensing regime and other prescriptions regarding prudential criteria and minimum solvency standards have been drafted after extensive discussions with sector representatives and are pending presentation to Parliament by the Minister of Finance.

 

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