The Executive Governor of the Central Bank of Liberia (CBL) Dr. Joseph Mills Jones has underscored the importance of recognizing the vital role of the West African Bankers Association (WABA) in strengthening cooperation, capacity building, and information sharing among banks within the ECOWAS sub-region, especially given the lessons coming out of the global financial crisis.
Governor Jones said the efforts of WABA through the initiation of projects such as the West Africa Interbank Payment System (WAIPS), the Centralized Credit Risk Database, West Africa Banking Institute, and Quoting and Trading in ECQWAS National Currencies are worth commending.
In a statement which was read on his behalf by CBL Deputy Governor Theophilus T. Beetie at the 63rd Ordinary Meeting of the Executive Council of WABA held yesterday in Monrovia, the CBL Boss noted that the policy of WABA at supporting cooperation among banks within the sub region is in the right direction because of the fact that growing interdependence has profound ramifications over the way banks act and make decisions, especially in curbing internal and systemic risks.
Dr. Jones said without doubt, in this new age, banking institutions cannot survive on their own without some form of interdependence.
Governor Jones said as today’s era of financial integration brings new complex challenges to central bankers in carrying out their roles in preserving monetary and financial stability, cooperative solutions can lead to superior outcomes in a technologically advancing world.
Dr. Jones further noted that the benefit of collaboration among bankers is obvious and it allows them to keep abreast with the developments in each other’s jurisdictions by leveraging on each other’s experience and knowledge to address any possible potential risks and vulnerabilities in the domestic as well as regional markets.
He said in this context, a certain degree of ‘openness’ in information sharing is demanded, because of its necessity in ensuring that there is no “ring-fencing” in favor of national interest.
“For instance, from risk supervision point of view, without openness, when problems begin to surface, there may be a divergence of interest at national levels, and this is likely to impede the early detection of emerging cross border systemic risks,” Governor Jones said.
The Central Bank Governor said, “There is a high likelihood that even in the midst of financial crisis in defending national interests, central banks may not be willing to disclose information on the vulnerabilities of financial institutions they supervise.”
Dr. Jones added, “In other words, it cannot be denied that the existence of asymmetric information in different jurisdictions often leads to untimely and uncoordinated responses in designing a crisis resolution strategy.”
He urged the West African Bankers not to wait for crisis to serve as the catalyst for collaboration, saying “to this end, we do embrace the Liberia Bankers Association’s engagement with WABA.”
Speaking earlier, Mr. Eddy Ogbogu, President of WABA said, “For the benefit of those who will not be in the plenary session, let me just tease your appetite and provide refuge to your curiosity by saying that by the end of this year all interested banks within the West African sub-region will be in position to establish intra-regional letters of credit in support of intra-regional trade instead of undertaking tripartite arrangements with banks in Europe and America.
The one day WABA meeting brought together bankers from Nigeria, Ghana, Sierra Leone and Liberia.