By Alison Kentish From teleSUR

US banks are cutting off correspondent banking relations in the hemisphere, creating panic among financial institutions

Caribbean heads of government say “derisking” by U.S. banks is causing the destruction of their economies.

The region has been branded “a high-risk area” for financial services and banks in the U.S. are cutting off correspondent relations with Caribbean indigenous banks and offshore banks with very little notice.

The issue will be taken up at a special Organization of American States (OAS) Assembly on Wednesday.

Sir Ronald Sanders, who chairs the body’s Permanent Council says countries in the Caribbean and Central America continue to be subject to these worrying developments, which directly affects their financial services sector, and in turn poses a threat to their economic growth and political stability.

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The de-risking means that the affected countries’ indigenous banks could lose access to the international financial markets. It would affect transactions such as wire-transfers.

Antigua and Barbuda’s Prime Minister Gaston Brown is the head of a high level group established by the 15 heads of government of the Caribbean Community (CARICOM), to tackle the issue.

He is responsible for making the Caribbean’s case to major bodies such as the World Trade Organization (WTO). He has publicly condemned the “de-risking,” describing the move as “erroneous, pernicious and vicious.”

“If there were any schemes designed to destroy the economies of several countries without a military war, then this is such a scheme,” he said to the media earlier this year. He maintains that the U.S. has labeled the region a “high risk” area without evidence to support this allegation or any consideration of the branding’s “grave effects” on the countries.

According to a statement from the OAS, former Financial Services Minister of the Bahamas Ryan Pinder is among three experts who will address the OAS Permanent Council.

The OAS said this week that the severing of correspondent banking relationships with commercial banks in some member states by global banks in other member states poses a severe threat to economic growth, social development and political stability, especially of small economies, by curtailing their ability to participate in standard international financial and economic transactions.

The Permanent Council meeting scheduled for Wednesday is part of a call to action to ensure that banking regulations designed to foster transparency and accountability do not result in financial exclusion and economic decline of small economies by cutting their access to international correspondent banks.

IMAGE: Home grown 1st National Bank, Castries Saint Lucia. Financial experts say it is indigenous banks that are suffering most from de-risking | Photo: teleSUR

For more on this story go to: http://www.telesurtv.net/english/news/OAS-Takes-up-Caribbean–Central-Americas-Banking-Worries-20160329-0060.html