In some of the Caribbean islands, demand growth evidenced by still strong credit, has not dropped dramatically, and in many instances, interest rates are below inflation rates. That is to say, real interest rates are negative; and this has occurred at a time when banks anticipate heightened levels of delinquencies, and would prudently adjust their credit standards.
This has the potential to force individuals to use their savings to cope with normal activities. As a regulator it is important that we encourage the right balance, that is both the concerns of the depositor as it affects his earnings on the one hand, and the borrower as it affects his costs on the other.