Question

1.Discuss the role and function of any large financial institution in the Commonwealth of Dominica as well as THREE impacts that this institution has on the economy of the commonwealth of Dominica, and any financial institution excluding the Central Bank.

2. Discuss THREE monetary strategies currently implemented in Commonwealth of Dominica . (9marks)

3. What are the benefits of the type of monetary policy strategies that instituted mentioned above?   What were the pitfalls in the strategy?

Answer 1

1) The commonwealth of Dominica is becoming the largest banking centers in the world. It is a major financial hub .One of the financial institution is Royal bank of Canada. Royal Bank of Canada provides commercial banking services as well as personal banking services.It manages wealth,does corporate as well as investment banking ,provides insurance and asset management to small businesses and ,individual person and also to commercial organizations. RBC announced partial selling of its banking operations in the caribbean region including in Dominica, to a consortium of banks . Purchasing of consortium will fetch a huge amount . This was a good decision for long term success of RBC in future.So the clients in Dominica and the communities of Dominica will prosper.

2) On October 31st,2019, monetary policy rate was left unchanged at 4.50% for second month to encourage economic activity..So inflation grew a little from extremely low level. By 2019 end , inflation will rise to the target level.Banks became optimistic The need for more rate cuts got reduced due to the inflation rate reaching its target, economic activity boosting and weakening of Peso.

3) The economy expanded 5.5 % in November 2019 ad there was faster credit growth. There was expansion of financial services , construction and manufacturing in free trade zones.But there was weak tourist which affected hotels , bars and restuarants . Thus expansion got restricted.