Byles: Resilience defines economic leadership in emerging markets
Bank of Jamaica Governor Richard Byles emphasized that resilience is the new measure of economic leadership for emerging markets. Speaking at the Caribbean CFO Summit, he outlined how robust financial ecosystems can withstand shocks and support sustainable development.
Resilience: The new measure of leadership
Governor Byles argued that traditional economic metrics like Gross Domestic Product and growth rates are no longer sufficient in an era of perennial uncertainty and successive shocks.
He stated that leadership must now be measured by the ability to build financial ecosystems that can withstand shocks, adapt to rapid change, and support sustainable development.
Byles outlined resilience as multidimensional, encompassing macroeconomic buffers (robust foreign reserves, agile monetary policy, prudent fiscal policies), financial resilience (capital adequacy, liquidity, risk management), cyber resilience, climate resilience, and governance resilience.
He cited Jamaica's recent experiences with the COVID-19 pandemic, inflationary pressures, and severe hurricanes as stark reminders that volatility has become structural rather than episodic, demanding strong financial ecosystems with adequate capital and liquidity buffers.
Jamaica's calibrated path to stability
Jamaica has made significant progress in strengthening national resilience, building record foreign reserves of US$6.8 billion and implementing an independent central bank-led monetary policy framework.
Fiscal discipline has significantly reduced the debt-to-GDP ratio, and legislation is advancing for resolving failing financial institutions without public funds.
The Bank of Jamaica has adopted a calibrated, risk-based approach to prudential regulation, incorporating relevant Basel III elements tailored to the local financial system.
This ensures institutions hold higher-quality capital, maintain stronger liquidity, and adopt forward-looking risk management, supported by deeper supervisory engagement and a focus on systemic stability, including a transition to a Twin Peaks regulatory model.
Governance: The ultimate buffer
Sustainable, risk-adjusted profitability, not peak profits, is the true foundation of resilience.
Strong board governance, with independent directors and effective committees, is critical for defining risk appetite and holding management accountable.
This dynamic, including constructive challenge, protects depositors, shareholders, and the broader financial system from the consequences of weak corporate governance.