The decision last week by the central bank to open a loan window for Jamaican financial institutions that may require short-term cash to meet margin calls from foreign brokers for Jamaica government bonds, suggest the authorities have concerns that have not been shared with the public.

This is not to suggest that there are any fundamental problems facing Jamaican banks and brokers, which conventional wisdom says are properly regulated and, on the face of it, have healthy balance sheets. However, these institutions hold a substantial amount of the bonds, the majority issued by the Jamaican Government, even though the instruments were tendered in foreign markets.

The potential problem has to do with the fact that emerging markets bonds, including Jamaican ones, have been falling, as investors, burnt and spooked by the global credit crisis, bolt from what they perceive to be high-risk to safer instruments. For now, US bonds are seen as the safer bet.

As the central bank implied, pressure on Jamaican entities to make margin payments or meet repurchasing obligations could put pressure on the domestic foreign-exchange market and ultimately, the administrations macroeconomic programme. Further, any precipitous fall in bond yields could have a negative impact on the balance sheets of Jamaican brokers, with adverse consequences not only for confidence but performance.

These are issues which we suspect are not, in this region, unique to Jamaica. Other Caribbean countries face similar problems, if not relating to bonds, to the broader sweep of their economies from the credit crisis and the emerging global recession. All the regions tourism economies, for instance, will face soft tourism markets and weaker demand for their exports.

no reaction from region

Unfortunately, we do not sense a regional response to the crisis, unlike what has happened in Europe where the leaders of the euro-zone countries and the wider European Union have met to coordinate response to the liquidity challenges faced by their banks. Europe has agreed to over US$2 trillion in liquidity support to its banks.

In this region, the Caribbean Community has not reached the level of economic integration as the EU. However, a single market and economy among most of Caricoms 15 members is a work in progress. No member-state, therefore, can presume itself totally insulated from the problems of another.

We are surprised, therefore, that Caricoms leaders, in the face of this global crisis, have not convened a special conference to begin to coordinate a regional response to the problems that will surely affect all. There is likely to be greater insulation against the threat acting as a group than as mini states standing alone.

There is another reason, we suggest, for co-operative action by CARICOM. None of these states was at the table of Bretton Woods when the current global financial architecture was being crafted. This month at the United Nations, Prime Minister Golding said, as many in the developing world have been saying for a long time, that Bretton Woods is in need of a good overhaul.

It is a sentiment that also has long currency with Britains prime minister, Gordon Brown, which he repeated last week. The current global crisis is likely to stir action as soon as the new US president is inaugurated. Caricom cannot be passive participants. They must be clear on what they want, which demands work.