Bank of Jamaica (Amendment) Act, 2020

JAMAICA

No. 12 — 2020

I assent,

P. C. Allen
Governor-General.
22nd day of December 2020

AN ACT to Amend the Bank of Jamaica Act.
[22nd day of December 2020]

BE IT ENACTED by the Queen’s Most Excellent Majesty, by and with the advice and consent of the Senate and House of Representatives of Jamaica, and by the authority of the same, as follows:—

1. —(1) This Act may be cited as the Bank of Jamaica (Amendment) Act, 2020 and shall be read and construed as one with the Bank of Jamaica Act (hereinafter referred to as the “principal Act”) and all amendments thereto.

(2) This Act shall come into operation on a day to be appointed by the Minister by notice published in the Gazette.

Short title, commencement.

---

2. —(1) Section 2 of the principal Act is amended as follows—
   (a) by renumbering the section as section 2(1); (b) in subsection (1) as renumbered, by— (i) deleting the definitions of “Deputy Governor”, “Governor”, “Senior Deputy Governor”, “Supervisor” and “Supervisory Department” and substituting therefor the following new definitions, respectively— “‘bankrupt’ means a bankrupt within the meaning of the Insolvency Act; “‘Deputy Governor’ means a Deputy Governor of the Bank appointed pursuant to section 6D; “‘government company’ means a company registered under the Companies Act, being a company that is wholly owned by the Government or an agency of Government or in which the Government or any agency of Government holds more than fifty per centum of the shares; “‘Governor’ means the Governor of the Bank appointed pursuant to section 6A; “‘Senior Deputy Governor’ means a Senior Deputy Governor of the Bank appointed pursuant to section 6D; “‘statutory committee’ means the— (a) Financial Policy Committee, the Financial System Stability Committee, the Financial Regulatory Committee, and the Monetary Policy Committee established under sections

34FI, 34H, 34BB and 34FB, respectively; and
(b) the Supervisory Committee constituted under section 6 of the Banking Services Act; “‘Supervisor’ means the Governor, acting in the capacity as Supervisor of banks, financial holding companies and other specified financial institutions, pursuant to the provisions of this Act, the Banking Services Act and any other enactment; “‘Supervisory Department’ means the Supervisory Department established under Part VA;”; (ii) inserting the following new definitions in the proper alphabetical sequence— “‘fiscal year’ means the period of twelve months ending on the 31st day of March in any year; “‘marketable securities’ means such securities, as may be agreed between the Bank and the Minister, that can be readily bought and sold at a fair price and are issued in accordance with the Public Debt Management Act and which shall be charged on the Consolidated Fund; “‘monetary liabilities’ means all liabilities of the Bank including notes and coins in circulation issued by the Bank except— (a) liabilities due by the Bank to ministries and departments of Government, statutory bodies and executive agencies as

designated under the Executive Agencies Act;
(b) the Consolidated Fund; and
(c) liabilities due by the Bank to the International Monetary Fund;”.
(c) by inserting the following new subsections— “(2) Where the provisions of this Act require that a person or entity shall, prior to making a decision, act on the advice of another person or entity— (a) the person or entity, that is required to make the decision, shall solicit the advice from that other person or entity that is required to provide the advice; and (b) the advice received pursuant to paragraph (a) shall be taken into account by the person or entity that is required to make the decision, but the advice need not however be taken. (3) Where the provisions of this Act require that a person or entity shall act on the recommendation of another person or entity, prior to making a decision, the following shall apply— (a) the person or entity that is required to make the decision shall solicit the recommendation from the person or entity that is required to provide the recommendation; (b) where pursuant to paragraph (a), a recommendation is received but is not accepted by the person or entity that is required to make the decision, such person or entity may proceed to make the decision otherwise than in keeping with the recommendation that was made. (4) Where the provisions of this Act require that a person or entity shall make a decision after consultation with another person or entity, the following shall apply— (a) the person or entity that is required to consult shall do so at the time at which proposals in relation to the making of the decision are at a formative stage; (b) the person or entity to be consulted shall— (i) be provided with sufficient information and be given a reasonable period of time so as to allow for proper consideration of the proposals; and (ii) be advised of the time frame within which a response is to be provided; (c) the person or entity that is required to make the decision shall not await a response beyond the timeframe given for consideration of the proposals pursuant to paragraph (b); and (d) where feedback is received as a result of any consultations, it need not be followed by the person or entity that is required to make the decision.”.

3. The principal Act is amended by inserting next after section 2, the following new sections—
   “Meaning of fit and proper person.
   2A.—(1) For the purposes of this Act, an individual, whether in Jamaica or elsewhere is a fit and proper person if— (a) the individual— (i) has not been convicted of an offence involving dishonesty or

of an offence listed in the Second Schedule of the Proceeds of Crime Act or an offence that is similar to any such offence in another jurisdiction; (ii) is not bankrupt; and (iii) is in compliance with any tax and other statutory requirements imposed on the individual; (b) the individual’s employment record or any other information does not give the Minister, acting on the advice of the Governor, reasonable cause to believe that the individual carried out any act involving dishonesty or any act involving impropriety in the engagement of banking business or other financial services; and (c) the individual is, in the opinion of the Minister, acting on the advice of the Governor— (i) a person of sound probity, and is able to exercise competence, diligence and sound judgement in fulfilling his functions under this Act or any other relevant enactment; (ii) a person whose appointment to the Board or a statutory committee established under this Act will not result in a conflict of interest; and (iii) a person who possesses the knowledge, skills and

experience which are necessary for the intended functions to be carried out by that person.
(2) The Minister, acting on the advice of the Governor, shall have regard to any evidence that the individual— (a) has engaged in any business practice appearing to the Minister to be deceitful or oppressive or otherwise improper or which reflects discredit to his method of conducting business; or (b) has contravened any provision of any enactment designed for the protection of the public against financial loss due to— (i) dishonesty, incompetence or malpractice by persons concerned in the provision of banking, insurance, investment or other financial services or in the management of companies; or (ii) bankruptcy. 2B. The provisions of the Public Bodies Management and Accountability Act shall not apply to the Bank of Jamaica.”.

4. Section 5 of the principal Act is repealed and replaced as follows—
   “Principal objectives and functions of the Bank.
   5.—(1) The principal objectives of the Bank shall be the maintenance of price stability and financial system stability with the primary objective being the maintenance of price stability. (2) The functions of the Bank shall include the following— (a) to formulate and implement monetary policy; (b) the implementation of prudential and macro-prudential policies; (c) to issue and redeem notes and coins; (d) to hold and manage the external reserves of Jamaica; (e) to foster the development of money and capital markets in Jamaica; (f) to act as banker and financial agent of the Government; and (g) to act as banker to deposit taking institutions. (3) The Bank shall have all the powers that are necessary, incidental or ancillary to give effect to its objectives and carry out its functions. (4) The Bank shall carry out its functions with a view to achieving the principal objectives specified under subsection (1) and shall do so in a manner that recognizes the growth and employment objectives of the Government.”.

5. Section 6 of the principal Act is amended as follows—
   (a) by deleting subsection (1) and substituting therefor the following— “(1) There shall be a Board of Directors of the Bank which, subject to the provisions of this Act, shall be responsible for— (a) the strategy and policies of the Bank; and (b) the general oversight and administration of the affairs of the Bank.”; (b) by inserting next after subsection (1), the following new subsections— “(1A) The Board shall, in carrying out its responsibilities under subsection (1), oversee the general functions of the statutory committees of the Bank, (save and except for the decisions made by said committees) in order to ensure that said functions are carried out in accordance with their statutory mandate. (1B) Notwithstanding the provisions of subsection (1)(b), the general oversight and administration of the affairs of the Bank by the Board shall not affect the responsibilities entrusted to the Governor under section 6B, in relation to the day-to-day management and operations of the Bank and any decisions relating thereto. (1C) Notwithstanding subsection (1), the Board shall not be responsible for the development and implementation of the financial policy or monetary policy of the Bank.”. (c) in subsection (2)— (i) by deleting paragraph (c) and substituting therefor the following— “(c) a Deputy Governor, appointed to the Board by the Governor-General in Council, acting upon the recommendation of the Board; and”; (ii) by deleting paragraph (d) and substituting therefor the following— “(d) five other directors appointed by the Governor-General in Council.”; (d) by deleting subsection (3) and substituting therefor the following— “(3) Subject to subsection (3A), a Deputy Governor who is appointed to the Board pursuant to subsection (2)(c) shall not be appointed for a term which shall end on a date that is later than the date when his term of appointment as Deputy Governor comes to an end.”; (e) by inserting next after subsection (3), the following new subsection— “(3A) Where a Deputy Governor who is appointed to the Board pursuant to subsection (2)(c) no longer holds the office of Deputy Governor, for any reason whatsoever, his term of appointment as a member of the Board shall come to an end.”; (f) by inserting next after subsection (6) the following new subsection— “(6A) The Governor-General in Council may terminate the appointment of a person who is appointed as a director to the Board if the person— (a) becomes of unsound mind or becomes permanently unable to perform the functions as director by reason of ill-health; (b) is bankrupt; (c) is convicted and sentenced to a term of imprisonment; (d) is convicted of an offence involving dishonesty; (e) fails to carry out any of the functions conferred or imposed on the person as director under this Act; (f) engages in activities that may be reasonably considered to be incompatible with the functions as a director of the Board.”.

6. Section 6A of the principal Act is amended as follows—
   (a) by deleting subsection (3) and substituting therefor the following— “(3) A person appointed as Governor shall, subject to section 6C, hold office for a term of five years and may be reappointed.”; (b) by inserting next after subsection (3), the following new subsection— “(3A) Pursuant to subsection (1), the appointment as Governor shall be on such terms and conditions and for such emoluments as may be determined by the Minister after consultation with the directors of the Board appointed pursuant to section 6(2)(d).”.

7. Section 6B of the principal Act is amended as follows—
   (a) by renumbering the section as section 6B(1) and thereafter, deleting subsection (1) as renumbered and substituting therefor the following— “(1) The Governor, or, in his absence, the Senior Deputy Governor, or in the absence of the Governor and the Senior Deputy Governor, a Deputy Governor designated by the Board after consultation with the Minister, shall be in charge of the day to day management and operations of the Bank and shall be answerable to the Board in respect of actions and decisions in relation thereto.”; (b) by inserting next after subsection (1), as renumbered, the following new subsection— “(2) In addition to the day to day management and operations of the Bank, the Governor shall have such

other responsibilities and functions as are vested in the Governor under and by virtue of the provisions of this Act and any Regulations made under this Act, the Banking Services Act and any other enactment.”.

8. Section 6C of the principal Act is amended as follows—
   (a) by deleting the marginal note and substituting therefor the following— “Removal of Governor and Senior Deputy-Governor.”; (b) in subsections (1), (2) and (3), by inserting immediately after the word “Governor” wherever it appears in these subsections, the following— “or Senior Deputy Governor”.

9. Section 6D of the principal Act is amended as follows—
   (a) by deleting subsection (1) and substituting therefor the following— “(1) The Senior Deputy Governor shall be appointed by the Governor-General in Council, by instrument in writing, upon the recommendation of the Board, for a period not exceeding five years.”; (b) by inserting next after subsection (1), the following new subsections— “(1A) Pursuant to subsection (1), the appointment of the Senior Deputy Governor shall be on such terms and conditions and for such emoluments as may be determined by the Minister acting on the recommendation of the directors of the Board appointed pursuant to section 6(2)(d). (1B) Subject to subsection (1D), the Deputy Governors shall be appointed by the Board, by instrument in writing, on the recommendation of the Governor, for a period not exceeding five years. (1C) Pursuant to subsection (1B), the appointment of the Deputy Governors shall be on such terms and conditions and for such emoluments as may be determined by the Minister acting on the recommendation of the directors of the Board appointed pursuant to section 6(2)(d). (1D) Notwithstanding subsection (1B), where a Deputy Governor is also appointed as Deputy Supervisor pursuant to section 34B(2), the term of appointment of the Deputy Governor shall be the same as is applicable to his appointment as Deputy Supervisor under section 34B(2A).”; (c) by deleting subsection (3) and substituting therefor the following— “(3) Subject to subsection (4), in any case where a Deputy Governor who was not previously carrying out the functions of Deputy Supervisor, is appointed as Deputy Supervisor during the term of appointment as Deputy Governor, the appointment as Deputy Governor shall be deemed to have expired and the new appointment of the person as Deputy Governor and appointment as Deputy Supervisor shall commence.”; (d) by inserting next after subsection (5), the following new subsection— “(5A) The Board may terminate the appointment of a Deputy Governor, if the Deputy Governor— (a) becomes of unsound mind or becomes permanently unable to perform his functions by reason of ill-health; (b) is a bankrupt; (c) is convicted and sentenced to a term of imprisonment; (d) is convicted of an offence involving dishonesty; (e) fails to carry out any of the functions conferred or imposed on the Deputy Governor under this Act.”.

10. Section 7 of the principal Act is amended as follows—
    (a) by deleting subsection (1) and substituting therefor the following— “(1) The Bank may appoint and employ, at such remuneration and on such terms and conditions as it thinks fit, such officers, agents and employees as the Board considers necessary for the due performance of the functions of the Bank.”; (b) by inserting next after subsection (1) the following new subsection— “(1A) Subsection (1) shall not apply to the Governor who is appointed under section 6A and the Senior Deputy Governor or Deputy Governors who are appointed in accordance with section 6D.”; (c) by deleting subsections (2) and (4).

11. The principal Act is amended by deleting section 8 and substituting therefor the following—
    “Capital of the Bank.
    8.—(1) Subject to subsection (3), the capital of the Bank shall be twenty billion five hundred and seventy seven million dollars.
    (2) On or before the day on which this Act comes into operation, there shall be paid by the Government by issue to the Bank, marketable securities in respect of such capital in the sum of twenty billion five hundred and seventy three million dollars. (3) Notwithstanding subsection (1), the capital of the Bank may be increased from time to time by a resolution passed by the House of Representatives. (4) Pursuant to subsection (3), the amount of any increase specified in the resolution shall be paid by the Government by the issue to the Bank of marketable securities and shall be a charge on the Consolidated Fund.”.

12. The principal Act is amended by inserting next after section 8 the following new section—
    “8A. The statutory capital of the Bank shall comprise the paid-up capital of the Bank plus the sums standing to the credit of the General Reserve Fund established under section 9.”.

13. Section 9 of the principal Act is amended by deleting the section and substituting therefor the following—
    “General Reserve Fund.
    9.—(1) The Bank shall establish a General Reserve Fund— (a) which shall be credited— (i) at the end of each financial year with the net profits of the Bank determined in accordance with general accounting principles promulgated by the Institute of Chartered Accountants of Jamaica; and (ii) with the value of any marketable securities issued to the Bank pursuant to subsection (2); and (b) upon which shall be charged any net losses of the Bank at the end of any financial year. (2) Where, at the end of any financial year, the audited financial statements of the Bank, as at the end of that financial year, disclose that the statutory capital of the Bank is below three percent of the monetary

liabilities of the Bank, the Government shall, within six months of the start of the fiscal year immediately following, issue marketable securities to the Bank of an amount that is at least equivalent to the amount by which the statutory capital would have fallen short of three percent of monetary liabilities, which shall be a charge on the Consolidated Fund. (3) In the event that the marketable securities are not issued by the Government to the Bank within the period specified in subsection (2), the Board shall— (a) notify the Minister in writing thereof and request that the marketable securities be issued to the Bank before the end of the fiscal year in which they are due to be issued; and (b) transmit a copy of the notice to the Speaker of the House of Representatives, who shall have the notice laid in the House of Representatives. (4) Where at the end of any financial year, distributable earnings are greater than zero, the following shall apply— (a) an amount equivalent to one hundred percent of the distributable earnings for such financial year shall be paid by the Bank into the Consolidated Fund, within four months of the commencement of the fiscal year immediately following, in the case where the audited financial statements of the Bank disclose that the statutory capital is above eight percent of the monetary liabilities; (b) an amount equivalent to twenty five percent of the distributable earnings for such financial year shall be paid by the Bank into the

Consolidated Fund, within four months of the commencement of the fiscal year immediately following, in the case where the audited financial statements of the Bank disclose that the statutory capital is equal to or above five percent of the monetary liabilities and less than or equal to eight percent of such monetary liabilities; (c) no amount shall be paid by the Bank into the Consolidated Fund in the case where the audited financial statements of the Bank disclose that the statutory capital is below five percent of the monetary liabilities. (5) For the purpose of subsection (4), “distributable earnings” means the profits of the Bank, excluding unrealized foreign exchange gains and other unrealized gains for the financial year, to which is added unrealized foreign exchange gains and other unrealized gains from prior financial years that— (a) are realized during the financial year; or (b) have been realized in a prior financial year but have not previously been included in distributable earnings.”.

14. Section 23 of the principal Act is amended by—
    (a) deleting the proviso to paragraph (f) and substituting therefor the following— “Provided that the maximum loan or advance granted against any such security as is mentioned in subparagraph (iii) or (iv), shall be based on the Bank’s determination of the risk of such security losing its fair value during the life of the loan;”; (b) deleting paragraph (j).

15. Section 24 of the principal Act is amended in subsection (1)(c) by deleting the words “paragraphs (j) and” and substituting therefor the word “paragraph”.

16. The principal Act is amended by inserting next after section 34F the following new Parts—
    “PART VAA—Monetary Policy Committee
    34FA. In this Part, unless the context otherwise requires— “Committee” means the Monetary Policy Committee established by section 34FB; “medium term” means, In relation to the establishment of an inflation target, a period of not less than thirty-six months. 34FB.—(1) For the purposes of this Act, there is constituted a Committee to be known as the Monetary Policy Committee which shall have the responsibility for formulating the monetary policy of the Bank. (2) The Committee shall consist of— (a) three ex-officio members; and (b) two members, who shall be appointed pursuant to subsection (4). (3) Pursuant to subsection (2)(a), the three ex-officio members of the Committee shall be— (a) the Governor, who shall be the chairman; (b) the senior executive of the Bank who is responsible for monetary policy; and (c) a senior executive of the Bank appointed by the Board. (4) Subject to the provisions of this Part, the Governor-General in Council shall appoint two

persons to be members of the Committee (hereinafter referred to in this Part as the “appointed members”).
(5) The appointed members shall be persons who— (a) satisfy the fit and proper criteria specified under section 2A; (b) have the relevant expertise, qualifications or experience in economics, banking, finance, commerce, accounting, business or law; and (c) do not fall within any of the grounds for revocation referred to in subsection (9). (6) The following persons shall not be eligible for appointment to the Committee— (a) an appointed director of the Board of the Bank; (b) a member of any other statutory committee where this would result in more than one member of the Committee being a member of another statutory committee or a member of any statutory committee being on more than two statutory committees; (c) members of the House of Representatives or the Senate; (d) members of the Council of a Municipal Corporation, City Municipality or Town Municipality; and (e) persons who are employed with the Government, a statutory body or authority, an Executive Agency as designated under the Executive Agencies Act or a government company on a full time or contractual basis; and; (f) directors, officers, employees or auditors of a financial institution or a partner or employee of an external auditor of a financial institution. (7) The appointment of the appointed members of the Committee shall be evidenced by instrument in writing signed by the Governor-General, which shall specify the term of office of the member, which shall be five years. (8) An appointed member shall be eligible for reappointment. (9) Notwithstanding any provision in this Part to the contrary, the Governor-General in Council may, at any time, upon the recommendation of the Board, revoke the appointment of any appointed member if the appointed member— (a) no longer satisfies the fit and proper requirements specified under section 2A; (b) becomes of unsound mind or permanently unable to perform the functions as an appointed member of the Committee by reason of ill-health; (c) fails to carry out the functions required of a member of the Committee; (d) engages in activities that can reasonably be considered to be incompatible with the appointed member’s continued membership of the Committee; or (e) contravenes section 34FC. (10) The names of all members of the Committee as first constituted and any change in the membership of the Committee shall be published in the Gazette.”