Govt. tables four Bills to strengthen Bank of Guyana powers

Apr 27, 2018 News

Minister of Finance Winston Jordan

The government through Finance Minister, Winston Jordan laid four Bills in the National Assembly yesterday, all of which would strengthen the powers of Central Bank.
These documents are The National Payment System Bill 2018, Bank of Guyana (Amendment) Bill 2018, Deposit Insurance Bill 2018, and the Financial Institutions (Amendment) Bill 2018.
National Payment System Bill
This Bill seeks to introduce legislation for the establishment, regulation and oversight of a National Payments System for Guyana and for matters connected therewith.
It provides for the establishment of the National Payments System Council and it sets out the general powers and duties of the National Payments System Council. It also lays out the operational role of the Bank in relation to the National Payments System Council.
The Bill also paves the way for the licensing of payment service providers and systems operators.
With this document, the Bank of Guyana is given the power to impose individual conditions for the operation of systems and the provision of services, ask for information, and agree with the individual operator or payments service provider on limitations in the activity or specific protective measures or impose sanctions and withdraw the relevant licence.
Bank of Guyana (Amendment) Bill
This Bill seeks to amend the Bank of Guyana Act by explicitly giving it the power to provide temporary liquidity assistance to deposit taking financial institutions. The document outlines that this is an integral measure which is employed in maintaining the stability of the system.
Deposit Insurance Bill 2018
This Bill seeks to establish a Deposit Insurance Scheme and to lay out a regime governing its core elements – the Deposit Insurance Corporation and the Deposit Insurance Fund.
Given that deposit insurance is one of the components of the financial sector safety net, alongside supervision, resolution, and emergency liquidity assistance, this Bill seeks to address the inherent instability of maturity transformation in the banking sector.
This is in relation to the financing of long-term assets through the issuance of demand or short-dated deposits, which makes banks vulnerable to depositor runs and to contagion from less sound institutions.
The Bill notes that the advent of deposit insurance has proven to prevent major banking crises in the world over and plays a central role in maintaining financial stability.
Financial Institutions (Amendment) Bill 2018
The Financial Institutions (Amendment) Bill 2018 seeks to amend four sections of the Act while repealing another four sections.
It notes that the inadequacies of the existing bank insolvency regime do not distinguish between corporate failures and banking failures, as both are subject to a form of commercial insolvency law and in a number of respects; the commercial insolvency law model is ill-suited to deal with the failure of banks.
It states that the corporate insolvency model uses judicial instead of administrative proceedings with all the attendant delays.

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