APPENDIX 1 STRUCTURE OF THE JAMAICAN BANKING SYSTEM (1993 AND 1999) NAME OF INSTITUTION BOJ COMMERCIAL BANKS: BANK

OF NOVA SCOTIA C.I.B.C CENTURY NATIONAL BANK CITIBANK N.A. EAGLE COMMERCIAL BANK ISLAND VICTORIA BANK JAMAICA CITIZENS BANK MUTUAL SECURITY BANK NATIONAL COMMERCIAL BANK TRAFALGAR COMMERCIAL BANK WORKERS SAVINGS & LOAN BANK * M+ F * * * * * * * * * * * * * F * M+ M+ M+ MERGED WITH NCB * * M+ 1993 * 1999 *

In existence in 1993 and 1999 Being merged into one (1) commercial bank Union Bank Ltd. Failed

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APPENDIX 1 (CONTD) STRUCTURE OF THE JAMAICAN BANKING SYSTEM (1993 AND 1999) NAME OF INSTITUTION MERCHANT BANKS: BARCLAYS BILLY CRAIG MERCHANT BANK BLAISE TRUST & MERCHANT BANK BUCK SECURITY MERCHANT BANKERS C.I.B.C. TRUST & MERCHANT BANK CALDON FINANCE MERCHANT BANK CAPITAL & CREDIT MERCHANT BANK CARIBBEAN TRUST MERCHANT BANK CENTURY NATIONAL MERCHANT BANK CITI MERCHANT BANK CORPORATE MERCHANT BANK DB&G MERCHANT BANK EAGLE MERCHANT BANK FIDELITY TRUST & MERCHANT BANK GEORGE AND BRANDAY MER. BANK HORIZON MERCHANT BANK INTERCONTINENTAL MER. BANK INTERNATIONAL TRUST & MER. BANK INVESTMENT & FINANCE MERCHANT ISLAND LIFE MERCHANT BANK ISSA TRUST & MERCHANT BANK JAMAICA CITIZENS TRUST & MER. B KNUTSFORD CAPITAL MERCHANT BANK M F & G TRUST & MERCHANT BANK MANUFACTURERS MERCHANT BANK MUTUAL SECURITY MERCHANT BANK NCB TRUST & MERCHANT BANK PARTNER MERCHANT BANK PAN CARIBBEAN MERCHANT BANK SCOTIA TRUST & MERCHANT BANK SOLNAR LIMITED TOWER MERCHANT BANK WICO MERCHANT BANK WEST INDIA TRUST & MERCHANT BANK WEST INDIES TRUST & MERCHANT WORKERS TRUST & MERCHANT BANK * F In existence in 1993 and 1999 Failed * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Not in Operation Not in Operation (F) (F) (F) * Not in Operation (F) * Not in Operation (F) (F) * Not in Operation (F) * Not in Operation (F) (F) * Not in Operation (F) (F) * Not in Operation Not in Operation (F) * * * * * Not in Operation * Not in Operation (F) * * Not in Operation (F) 1993 1999

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APPENDIX 2 JAMAICA - IMPORTANT INSTITUTIONAL DEVELOPMENTS AND POLICY (1985 TO 1995) 18/11/85 01/10/90 Introduction of auction for Certificates of Deposit issued by the BOJ. Savings rate deregulated. Commercial banks now authorised to set their own rates. Commercial banks empowered to operate foreign currency B accounts on behalf of residents and nonresidents. The main characteristics are as follows: Due to an amendment to the Exchange Control Notices, commercial banks are now authorised to accept foreign currency cash for credit to any single A account under the following conditions:BOJ introduces Repurchase Agreement for Treasury Bills whereby holders of these ills can contract to sell same for immediately available funds and simultaneously buy these same securities for delivery within a prescribed period. With respect to reserve requirements against foreign currency reserves, the following new arrangements were effective: (a) (b) A prudential reserve of 40% should be held against all foreign currency accounts excluding A accounts. A cash reserve of 20% (which will form a part of the prudential reserve) should be held against the foreign currency deposits indicated in (a).

25/10/90

08/02/91

01/12/91

Separate cash reserves will be required in respect of deposits in United States and Canadian dollars, and the Pound Sterling. Deposits in other currencies will be converted into either of the aforementioned currencies for purposes of determining the cash reserve. (c) Although no cash reserve will be held against foreign currency A accounts, the prudential reserve against these accounts will remain at 50%.

22/07/92 31/12/92

Treasury Bill ceiling increased from $4.5b to $6.5b Implementation of revised financial legislation. These involved:(i) The BOJ (Amendment) Act, 1992. The main amendments effected by this Act were:(a) Provisions to make the implementation of monetary policy more effective;

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APPENDIX 2 (CONTD) JAMAICA - IMPORTANT INSTITUTIONAL DEVELOPMENTS AND POLICY (1985 TO 1995) (b) (c) (d) (ii) (iii) Provisions to rationalise the treatment of BOJ losses; Provisions, carried over from Exchange Control, to regulate the management of FX; and Provisions to give statutory recognition, in the BOJ Act, to the department of Bank Inspection.

The Banking Act, 1992; The Financial Institutions Act, 1992, replaced the Protection of Depositors Act, and is designed to regulate the operation of merchant banks, trust companies and finance houses (near-banks) which take deposits from the public.

31/12/92

The provisions in (ii) and (iii) are largely the same, save that merchant banks are not permitted to take deposits repayable on demand, and therefore, not permitted to operate chequing accounts. Some of the more important revised provisions are:I. II. Stronger provisions regarding licensing, minimum levels of capital, and levels of deposits which may be taken. Stricter prudential controls on the activities of institutions, such as insider loans, investments in commercial companies, and levels of lending to single customers or to groups. Provisions for possible loan losses. Greater scrutiny of persons acquiring control of institutions. Strengthening of the powers of the supervisor, both the Inspection Department and the Minister. Enhancement of regulation making powers to achieve greater flexibility in areas such as the adequacy of capital, solvency, the obtaining of co-operation from auditors, and the maintenance of high personal standards among persons working in the banking industry. A full and comprehensive mechanism for identifying and dealing with offences of troubled conditions relating to institutions, including ways of rescuing troubled institutions. Amendments to guidelines relating to Repurchase Agreement of 8 February 1991 effected. The Liquidity Support/Repurchase Agreement is a facility under which holders to Treasury Bills, Local Registered Stocks, or Equity Investment Bonds contract to sell these securities for

III. IV. V. VI.

VII.

03/05/93

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APPENDIX 2 (CONTD) JAMAICA - IMPORTANT INSTITUTIONAL DEVELOPMENTS AND POLICY (1985 TO 1995)

immediately available funds, and simultaneously buy the same securities for delivery within a prescribed period. Under the Facility, securities transactions are negotiated without incurring penalties for premature encashment. 14/07/93 26/07/93 Treasury Bill ceiling increased from $6.5b to $7.5b The following amendments were Support/Repurchase Agreement:(1) (2) effected re-Liquidity

The rate on repurchase agreements will reflect current market conditions; At maturity of any repurchase contract, the relevant current account with the BOJ will be automatically debited.

06/09/93 18/04/94

The Government of Jamaica placed on the market a US$20m bearer bond issue. BOJ created a new financial market arrangement involving a number of financial market intermediaries to be known as Primary Dealers. The specific role of these dealers will be to provide continuous underwriting support for all new issues of The Minister of Finance signed an exemption order under Section 25(c) of the BOJ Act which allows persons to buy goods and services in foreign currency and receive the exchange in Jamaican Dollars. Government of Jamaica offers Variable Rate Local Registered Stock 1999(A) in exchange for holdings in whole or in part of Variable Rate Local Registered Stock 1994. Stock issued in acceptance of this conversion will not qualify to be counted as Liquid Assets. Government expanded the group of Primary Dealers. Treasury Bill ceiling increased from $7.5b to $12b.

12/05/94

17/08/94

29/08/94 30/08/94

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APPENDIX 3A JAMAICA - SIGNIFICANT SUMMARY PROVISIONS OF THE EXCHANGE CONTROL (1985)

Migrants Remittances Remittances of capital and income to migrants and beneficiaries under wills and intestacies continued to be prohibited, except in cases where approvals were granted by the Minister of Finance on humanitarian grounds. Pensions Pensions payable to non-residents under Government and other schemes approved by the Commissioner of Income Tax were remitted on a current basis. Profits and Dividends Profits and dividends payable to non-residents were remitted net of taxation on a current basis. Royalties, Trade Marks, Commissions, Fees, Head Office Expenses and Management Expenses Insurance Reinsurance premiums were approved on the recommendation of the Superintendent of Insurance. External Accounts External Account holders were given the option of operating either External Accounts or Foreign Currency Accounts. Work permit holders were allowed to remit abroad 30% of their annual basic income. Overseas Retained Accounts (a) With the exception of FX earners who operate in critical areas of the economy, all overseas retained accounts have been closed. (b) Hotels are required to deposit all foreign currency receipts into the Jamaica National Retained Account which was established in May 1984, and from which their current FX commitments are met. Foreign Currency Term Deposit Accounts Foreign Currency A Accounts were established in 1984 and are still in operation. These accounts may be operated by both residents and non-residents who satisfy the stipulated criteria and may only be credited with funds transmitted from abroad through the banking system. There are no restrictions on the remittance of funds held in Foreign Currency Deposit A Accounts.

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APPENDIX 3A (CONTD) JAMAICA - SIGNIFICANT SUMMARY PROVISIONS OF THE EXCHANGE CONTROL (1985) Sale and Purchase of Real Property by Non-residents Approval required by Minister. Foreign Investment Approvals and Inflows Foreign investment applications are approved by the Joint Ministerial Committee which meets once each month. Loans to Non-resident Controlled Companies Local borrowing by non-resident controlled companies is limited to 25% and 10% of the net worth of manufacturing and distributive corporations, respectively.

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APPENDIX 3B JAMAICA - EXCHANGE CONTROL AND FX MARKET DEVELOPMENTS (1983 1995) 10/01/83 Exchange Control Parallel FX market implemented establishing two rates of exchange:(i) (ii) 01/11/89 17/09/90 Official for official debt transaction Parallel for other transactions including business travel

FX The exchange rate of the Jamaican dollar to the United States dollar is fixed at J$6.46 buying and J$6.50 selling. FX The exchange rate of the Jamaican dollar to the US dollar is now determined by prevailing market rates, i.e. commercial banks are now authorised dealers and will specify from time to time the buying and selling rates for the US dollar. The following exchange rates are now in effect: (i) Average of Market Exchange Rates daily weighted average buying and selling for spot transactions in the primary and interbank markets for all commercial banks. Customs and Statistical Rate daily weighted average selling rates for spot transactions in the primary and interbank markets for all commercial banks. FX Bureau Rates weighted average of the commercial banks over-the-counter buying rates, adjusted for the relevant spread of each Bureau. Over the Counter Rates for the Commercial Banks rates posted daily by the commercial banks.

(ii)

(iii)

(iv) 01/07/91

Victoria Mutual, Jamaica National, Manufacturers Merchant and Pan Caribbean Merchant Bank were designated authorised dealers of FX under the Exchange Control Act. Persons resident outside of Jamaica (non-resident investors) no longer require Exchange Control approval for lending foreign currency to Jamaican entities or acquiring equity or other shareholding or interests in such entities in connection with capital investments undertaken in Jamaica by such non-resident investors. The borrowing of foreign currency by Jamaican entities and/or the issuance of equity and/or other shareholding or interest by such entity to non-resident investors in connection with a capital investment undertaken in Jamaica by such

22/09/91

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APPENDIX 3B (CONTD) JAMAICA - EXCHANGE CONTROL AND FX MARKET DEVELOPMENTS (1983 1995) non-resident investors no longer require Exchange Control approval. The capital investment may either be direct or portfolio (indirect) investment 25/09/91 Exchange Control (Removal of Restrictions) Order implemented. Consequent on the implementation of the Removal of Restrictions Order, the following measures were introduced:(i) Exporters and all other earners of FX will be free to hold their earnings in foreign currency accounts locally and abroad and utilise the same for any foreign obligations. All Retained Accounts including those for exporters, villas and apartments, In-Bond Operators, and other tourism interests, have been abolished. Compulsory sales to the Jamaica National Retained Account (JNRA) by the tourism sector will no longer be required. The existing mechanism for settlement of CARICOM transaction swill no longer continue. Exporters to and importers from CARICOM will make their own arrangements for settling their transactions. The BOJ will eventually restrict its provision of FX to the servicing of the Public external debt, making payments in respect of diplomatic missions, and other essential requirements of the Government. All payments to Government which by agreement or law are payable in FX as well as FX proceeds of loans to Government Agencies will be paid directly to the BOJ. A Accounts: NON-RESIDENTS will continue to hold tax free A accounts on the existing terms. RESIDENTS will be free to maintain foreign currency accounts locally or abroad, but these will be subject to the ordinary tax laws of Jamaica and the foreign country. ALL RESIDENTS with balances in their A accounts as at 20 September 1991, will continue to receive (up to the time of their withdrawal or use), tax-free interest and the freedom to use the funds for whatever purpose.

(ii)

(iii)

(iv)

(v)

(vi)

(vii)

25/10/91

Exchange Control (Removal of Restrictions No. 2) Order of 1991: (I) Requires that only authorised dealers buy, sell, borrow, or lend in FX unless approved by the Minister.

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APPENDIX 3B (CONTD) JAMAICA - EXCHANGE CONTROL AND FX MARKET DEVELOPMENTS (1983 1995) (II) Stipulated that persons buying, selling, borrowing, or lending foreign currency may only do so through an authorised dealer. Sets penalties and fines for offences against the Act.

(III) 21/06/93

The following are amended guidelines for the Inter-bank FX Market: 1. 2. The BOJ will discontinue the provision of indicative rates to authorised dealers. Each authorised FX dealer will establish his own buying and selling rates of exchange which is to be market determined.

17/02/94

The following conditions will apply to all persons who qualify to operate Cambios: (a) The successful applicant will be required to pay an annual fee of US$2,500 or the JA$ equivalent for each location. An applicant will be allowed to operate more than one location. Cambio licenses are renewable not transferable; Licensees operating in hotels and at ports of entry will be required to operate in such a manner that the special requirements of these locations will be satisfied; Licensees can purchase foreign currency notes and travellers cheques in unlimited amounts and drafts and money orders up to a maximum of US$2,500 or its equivalent in other currencies, in any one transaction, but can only sell in the form of cash at prevailing market rates; Licensees will be required to sell 20% of the gross amount of FX purchased to the BOJ;

(b)

(c)

(d) 09/05/95

Implementation of the BOJ (authorised dealers Order 1995 which authorises 15 institutions licensed under the FIA to operate as authorised dealers in relation to all foreign currencies and foreign currency instruments. Licensees are allowed to lend and borrow in foreign currency as well as trade foreign currency instruments. The eleven (11) institutions previously granted limited FX dealer status have had this status have had this status revoked consequent on the granting of full authorised foreign currency dealership.

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APPENDIX 4
JAMAICA - MONETARY POLICY MEASURES 1975 TO 1995 1975 X X 1976 X 1977 X 1978 1979 X X X X X 1980 1981 1982 1983 X 1984 X X X

Savings Rate Liquid Assets Ratio Cash Reserve Ratio Liquidity Support Facility Penalty for Reserve Breaches Current A/c Int. Payments Credit Controls Open Market Operations CDs Treasury Bill Ceiling Treasury Bill Penalty Rate CD Penalty Rate FX Regulations Exchange Rate Adjustment Rediscounting Facilities/Rate Open Market Operation (LRS & REPOS)

X X

X X X X X X X X X X X X X X X

X X

Savings Rate Liquid Assets Ratio Cash Reserve Ratio Liquidity Support Facility Penalty for Reserve Breaches Current A/c Int. Payments Credit Controls Open Market Operations CDs Treasury Bill Ceiling Treasury Bill Penalty Rate CD Penalty Rate FX Regulations Exchange Rate Adjustment Rediscounting Facilities/Rate Open Market Operation (LRS & REPOS)

1985 X X X

X X X

1986 X X X X X X X

1987 X

1988 X X

1989 X X X X

1990 X X

1991 X X

1992 X X X

1993

1994

1995 X X

X X

X X

X X X X

X X X X X

X X X X

X X

X X

X X

X X X X

X X X X

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APPENDIX 6 FINANCIAL INTERMEDIARIES JAMAICAN FINANCIAL SYSTEM THE CENTRAL BANK Commenced operations in May 1961, primarily for management of the banking system. COMMERCIAL BANKS The 1st official commercial bank commenced operation in 1836. Commercial banking services include current account facilities, time and savings deposit facilities, rediscounting facilities (mainly foreign bills), made advances for a variety of purposes and tendered a wide range of services. They were particularly active in financing export agriculture, imports, hotel development and the provision of working capital for industry. By 1961, the commercial banking sector was well developed in Jamaica, offering similartype services mentioned above. MERCHANT BANKS In the early 1970s, there was an upsurge in merchant bank activity with the first such institution established in late 1969 and expanding to a total of 6 by 1973. These institutions grew out of the need to provide medium and long-term financing for the business sector and the development of the money market was a major part of the functions of merchant banks. CREDIT UNIONS The first credit union commenced its operations in 1941 with 98 members. By the end of 1969, the number of institutions had grown to 132. The credit union movement was seen as important to the provision of cheap funds to low income earners, as well as, provide a source of financial advice for small upcoming business entrepreneurs. DEVELOPMENT BANKS The first development bank was established in 1969. They were created primarily to assist small farmers through the provision of medium to long-term financing at rates below that of the market. LIFE INSURANCE COMPANIES Life insurance companies were established in the 1960s and coincided with the boom in the building and construction sector. UNIT TRUST COMPANIES Unit Trust Companies commenced operations in Jamaica in 1970. Unit Trust invested primarily in equities and offered unitised investments to investors.

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APPENDIX 6 (CONTD) FINANCIAL INTERMEDIARIES JAMAICAN FINANCIAL SYSTEM BUILDING SOCIETIES The building societies commenced their operations in the early 1960s when the demand for mortgage financing grew considerably. Between 1961 and 1969, the number of such institutions grew significantly. TRUST COMPANIES The trust companies commenced operations in Jamaica in the early 1960s. They were considered commercial bank affiliates. The resources of these institutions consisted mainly of local deposits, bank borrowing and share capital subscribed by the parent commercial banks and lending activities were concentrated in long-term mortgages. GOVERNMENT SAVINGS BANK The Government Savings Bank was established in 1870 to control and operate a number of private banks then in existence. The bank with a great network of branches (later through) the postal services) provided a place of safe keeping for the funds of the many peasants in the early plantocracy.

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