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Banking

EU regulations pose a threat to regional growth

Following a period of sustained economic growth, the Caribbean is faced with a new challenge. Recent developments in international legislation might reduce capital inflows and put more pressure on the region's financial sector.

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THE CARIBBEAN HAS traditionally been economically dependent on agriculture and tourism. However, in recent years the financial services sector has become increasingly important.

Through a combination of economic stability and a favourable tax structure, the Caribbean's sophisticated financial centres now attract large capital inflows. However, with tax avoidance and money laundering on the increase, many countries have become a target for international legislation. In July 2005, the implementation of the EU Tax Savings Directive and, later, the Third EC Money Laundering Directive might change the dynamics of offshore banking in the Caribbean.

The Caribbean's largest economies are Trinidad and Tobago, Barbados, and Jamaica, each with its own currency. Since 1983 the Eastern Caribbean States (Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, St Kitts and Nevis, St Lucia, and St Vincent and the Grenadines) have shared the Eastern Caribbean dollar.

Much of the Caribbean's economic success has been achieved through regional integration. Formally Carifta, the Caribbean Community and Common Market (Caricom) was established in 1973 as a Free Trade Association and now plays a central role for its 14 member states. Members include the Eastern Caribbean States, Jamaica, Barbados, and Trinidad and Tobago.

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