Correspondent banking, the collective term for banking services provided by a bank in one country to a financial institution in another, has been the backbone of international banking operations and payments for some time. Smaller banks without a large international network of their own, in particular, rely on their relationships with correspondent banks in other countries to make cross-border payments.
For the past two to three years, however, correspondent banks in the United States, Europe and Canada started severing ties with banks in the Caribbean.
The Caribbean Association of Banks warned in August that the decline of correspondent banking relationships among financial institutions in the Caribbean undermines trade and business activity and threatens the economies in the region.
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