BOJ moves ahead with plans for supervision of credit unions
BOJ Deputy Governor Maureen Simms.
The Bank of Jamaica (BOJ) continues to move ahead with its plans for the supervision of the credit union sector, noting as at June 30, 2020, total assets for credit unions stood at $131.0 billion with a reported membership base of 1.02 million members.
BOJ Deputy Governor Maureen Simms said the objective remains a central plank of the bank’s plans.
Credit unions have a wide reach across the length and breadth of the island given the number of Jamaicans who have stored their personal wealth in the form of member shares and deposits (over one million members and an asset base of $131.0 billion or 6.2 per cent of GDP as at end June 2020), Simms said.
“As such, it is important that steps are taken to ensure the stability of the sector since any systemic failure will affect a wide cross-section of persons in the society, particularly the most vulnerable, she said.
Steps remaining to bring the credit union sector under supervision are the tabling and passage of two companion pieces of legislation through Parliament. These are the Credit Union (Special Provisions) Bill and an amended Co-operative Societies Act (CSA).
Passage of both pieces of legislation, once brought into effect, will allow the Bank of Jamaica to commence the licensing process for credit unions, the deputy governor stated.
Simms said the oversight of all deposit-taking institutions (DTIs), including credit unions, by one regulator limits fragmentation of supervision of DTIs and works towards ensuring the continued safety and soundness of the financial system by providing comprehensive information to allow for on-going assessment of the evolution of risk across the deposit taking sector.
Additionally, she said, supervision will aid macro-prudential supervision of the financial system and sustained identification of excessive risks to ensure financial stability.
BOJ has the overall responsibility for financial system stability and therefore has a vested interest in the resilience of the financial system.
Under central bank supervision, savings within the credit union sector would be insured under the deposit insurance scheme administered by the JDIC, similar to other deposit taking institutions.
The coverage under the deposit insurance scheme has recently doubled to $l.2 million.
The deputy governor also noted that supervision would ensure implementation of a fit and proper framework for key employees and managers at credit unions to ensure that they are of sound probity and fit for the functions they are required to perform.