Pacific Island Countries grapple with mounting obstacles in Correspondent Banking Relationships (CBR), as highlighted in the recent high-level event convened in Sydney. Policymakers, regulators, and industry stakeholders congregated to confront the complex issues hindering the islands’ access to international financial markets through CBRs.
Pacific Islands Forum Secretary General Henry Puna.
Correspondent banking serves as the conduit between banks, enabling cross-border transactions and global market access. Henry Puna, Secretary General of the Pacific Islands Forum, set the tone by urging collaborative action in light of the region’s pronounced struggle with declining CBRs. Mr Puna underscored the pivotal role of CBRs in fostering economic growth, especially vital for smaller Pacific economies reliant on investments, trade, and remittances. Notably, the Pacific faces a disproportionately steep decline in CBRs amidst a global trend.
The challenges plaguing the islands emanate from a nexus of factors: geographical remoteness, compliance burdens, inadequate financial infrastructure, remittance dependence, and exorbitant costs. Tackling these hurdles demands a concerted effort from policymakers, regulators, and the private sector to devise sustainable solutions preserving the island nations’ access to international financial services.
Mr Puna voiced alarm over the soaring remittance costs in the Pacific, attributing them to dwindling CBRs and compliance expenses. He advocated for a multifaceted approach involving all stakeholders to alleviate these challenges and emphasized the imperative of innovation to mitigate the broader ramifications of anti-money laundering measures.
Governor Tatafu Moeaki of Tonga’s National Reserve Bank attributed these challenges to global pressures stemming from Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) standards, coupled with profitability concerns. Moeaki underscored the daunting task of compliance amidst resource constraints and called for concerted domestic and international endeavours to craft sustainable remedies.
Mr Moeaki outlined the islands’ initiatives, including regional action plans and engagements with global partners, aimed at addressing these challenges. He stressed the urgency of collaborative action to swiftly respond to the pressing issues confronting Pacific Island nations in maintaining CBRs.
Both Mr Puna and Mr Moeaki expressed optimism regarding the event’s potential outcomes and underscored the significance of inclusive approaches in devising solutions to mitigate the hurdles faced by Pacific Island countries. The deliberations underscored the critical need for concerted global efforts to safeguard the financial connectivity vital for the economic vitality of the Pacific region.
