IFCs’ critical role in the global recovery

Written by: Jersey Finance Posted: 30/06/2021

Joe Moynihan_mar20Joe Moynihan, Chief Executive, Jersey Finance, shares his views – published in the Future View supplement included with the May-July 2021 issue of Businesslife

Following such a challenging year as 2020, economies around the world are fixed on a path toward sustained economic and social recovery. I remain convinced that leading international finance centres (IFCs) such as Jersey have a critical role in that resurgence.

Recovery from the impact of this devastating pandemic requires huge investment. It will be the economically and politically stable jurisdictions with a sound regulatory infrastructure in place that are best placed to help channel capital to where it is needed most in the world, ensuring assets are secure and protected.

But the landscape for global financial services is changing fast and IFCs cannot afford to stand still and await the outcome of events. 

In purely commercial terms, Covid-19 has not only accelerated the pace of change in respect of digital technology, but it has also shifted the way we all work and interact with each other and how we transact business.

More specifically for us, it has brought into sharp focus the future direction of the financial services industry globally. 

For Jersey Finance, it has focused our minds even more on four areas: our resilience as a jurisdiction; our connectivity to the rest of the world; the ongoing value to international investors of our political and economic stability; and the increased focus on the natural world, climate change and other sustainability issues.

Strategic refresh

It is against this backdrop that we took the decision to refresh our strategic objectives, which in many ways mirrors the direction of travel prevalent within global financial services. 

Priorities in the months ahead are to follow through with our sustainability agenda, our focus on digital connectivity and innovation and our ambition as a leading IFC to drive positive change in local and global communities.

We have taken these decisions in a swiftly evolving global marketplace in which there will be far more emphasis on environmental, social and governance (ESG) matters. 

It is predicted, for example, by Deutsche Bank that ESG assets are likely to increase exponentially over the next 20 years to surpass $100trn by 2028. 

The global shift towards a greener, more inclusive economy is gathering pace. Investors are no longer focused solely on returns, with growing demand for portfolios to reflect purpose, leading to ESG principles becoming embedded in firms’ investment processes. 

These measures will ensure sustainable finance remains at the top of the agenda for the foreseeable future. 

Mindful of this, we have already launched our new sustainable finance strategy and long-term vision that, by 2030, Jersey will be recognised by its clients, key stakeholders and other partners as the leading sustainable international finance centre in the markets it serves.

The opportunity is clear, but more than that, Jersey has a responsibility to leverage its expertise and capital to support the transition to an environmentally and socially sustainable global economy.

We have taken steps locally in that direction and our most recent initiative this year was the launch of the Jersey Fund for a Wilder World in association with Durrell, the Jersey-based conservation group. 

The fund has been designed to give fund service providers in the island the opportunity to contribute a portion of their fees earned to support Durrell projects around the world.

Transformation

New ESG thinking is, of course, not the only big driver of change. The so-called ‘fourth industrial revolution’, the digital transformation of commerce worldwide, continues to gather pace. So we have also made fintech a core differentiator in an environment where cutting-edge digital connectivity is critical.

The Jersey for Fintech initiative, launched in 2020, means an island-wide supportive environment and vision for fintech businesses to start up, grow and flourish. 

FV_JerseyFInance_illoI believe the collaboration between key fintech stakeholders such as Digital Jersey, Jersey Finance and Locate Jersey sends a powerful message in the fintech arena that we are open for business in an integrated way, making doing business easier for clients worldwide. 

Access

There were other substantial developments during 2020 that will influence future direction, not least the formal exit of the UK from the European Union. 

The UK remains a major partner for Jersey and, as the UK maps out its position as a Global Britain, Jersey’s existing connections with the UK and its shared interest in seeing Britain prosper globally, should be the foundations for an even closer partnership in the years ahead. 

While we expect to forge an even closer partnership with the UK, Jersey retains access to the EU market through our own bilateral agreements and arrangements. 

Competition around levels of taxation, the debate over transparency, the increasing range of new regulatory standards, will continue to be debated, and pressure will remain on IFCs to be at the forefront of the implementation of new rules. 

We can anticipate further impetus in this direction for the foreseeable future, with the recent US call for a global rate of corporation tax being a case in point. 

Jersey has a strong track record in meeting and adapting to the highest global standards on tax. The important issue in relation to global corporate tax is that standards are applied in a non-discriminatory manner to achieve a level playing field.

We would also strongly advocate the importance of tax neutrality in supporting effective cross-border investment.

Jersey’s finance industry remains committed to supporting the government, which has a strong track record of cooperation with the EU and others on matters of tax and good governance.

We will also continue to work with our partners in order to support the development of further high-quality regulatory standards. 

I am more confident of our position, given that there is a greater appreciation and understanding within governments of the positive role that jurisdictions such as Jersey play. However, we must continue to amplify our message whenever we can with governments, regulators and global standard-setters.

Crunch time 

Earlier this year, I spoke about ‘crunch time for the IFCs’, a once-in-a-lifetime opportunity for IFCs to demonstrate the value they can add.

From Jersey’s perspective, to use our stability, global connectivity, expertise, capabilities as a facilitator of capital flows around the world and all our experience as a jurisdiction of 60 years standing, to help to rebuild economies and communities. 

As a forward-thinking jurisdiction, Jersey has devoted considerable resources and time in recent years to building partnerships with the local regulator and government. 

We have been able to add appreciably to our international footprint, growing our range of global clients while evolving our product offering. 

This sets us up with a solid platform to meet the opportunities and challenges ahead, while we also have robust regulations in place to stand up to the scrutiny that is inevitably faced by leading IFCs. 

We proved our resilience during 2020 and this will serve us well in the months ahead. More than anything, it fuels my belief that we are well placed for the journey ahead. 

I strongly believe that there will be a need for ever more resilient, stable, neutral jurisdictions, with the ability to evolve rapidly to changing market conditions that can support secure, impactful investment in the future as the world recovers from the devastation of the pandemic.


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