Financial globalisation not so great – Bank for International Settlements

   0   0 Blog, Tax Havens & Financial Crisis

We don’t have time today to do this one justice, but it’s an important pair of articles on FT Alphaville – here and here, which are introduced, if not fully summarised, thus:

“The consensus among Western policymakers is beginning to shift, however. The IMF officially changed its tune in 2011 by suggesting how emerging market countries could best limit overabundant inflows.

A trio of recent papers by top officials from the Bank for International Settlements goes further, however, arguing that financial globalisation itself makes booms and busts far more frequent and destabilising than they otherwise would be.”

The implications for tax justice are manifold – including that tax havens, whose spin doctors claim that they make international finance flow more smoothly, aren’t doing the world a service, even on that very incomplete metric. The FTA report asks:

“Are these massive flows, which are orders of magnitude larger than cross-border trade in goods and services, actually worthwhile? Could policymakers stabilize the financial system by constraining the global movement of capital without affecting real economic activity?”

And they note:

“The BIS scholars believe the relatively small net flows of the current account are “a distraction” from the much larger and systemically important gross flows of capital across borders. It is the gross capital flows that create enormous liquidity and maturity mismatches as well as excessive leverage.”

John Maynard Keynes pointed to some other, perhaps even more fundamental, mismatches they might have considered too:

“Experience is accumulating that remoteness between ownership and operation is an evil in the relations among men, likely or certain in the long run to set up strains and enmities which will bring to nought the financial calculation.

I sympathise, therefore, with those who would minimise, rather than with those who would maximise, economic entanglement among nations. Ideas, knowledge, science, hospitality, travel–these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible, and, above all, let finance be primarily national.”

The FT Alphaville reports contain fascinating forays into Switzerland and Germany before the Second World War, and plenty more. More on this, hopefully, soon.

In the meantime, here’s a pretty picture of financial crisis-related contagion, with tax havens centre stage.

 

 


Related Posts

The Offshore Wrapper: the Panama Papers, one year on

Photos from the Protest outside PwC 1 Embankment Place, part of the Global week of action for tax justiceWelcome to the Offshore Wrapper – your weekly update from TJN.  Happy Paniversary! This week it’s been one year since the Panama Papers were leaked, and a number of organisations around the world have been marking the occasion though the global week of action for tax justice. In London, activists from the TJN and the […]

READ MORE →

Protesting PwC: Professionals Without Conscience

Photos from the Protest outside PwC 1 Embankment Place, part of the Global week of action for tax justiceThis week is the global week of action for tax justice and on Wednesday 5th April activists from the Tax Justice Network and Methodists for Tax Justice held a protest outside the London offices of Price Waterhouse Coopers. The global week of action for tax justice is happening one year after the release of the […]

READ MORE →

Germany moves forward on corporate transparency

ReichstagThe Bundesrat has today voted to recommend implementing a public register of the beneficial ownership of companies and trusts.  Great news from Germany, as the country takes an important step forward towards corporate transparency.

READ MORE →

New estimates reveal the extent of tax avoidance by multinationals

Price Waterhouse CoopersNew figures published today by the Tax Justice Network provide a country-level breakdown of the estimated tax losses to profit shifting by multinational companies. Applying a methodology developed by researchers at the International Monetary Fund to an improved dataset, the results indicate global losses of around $500 billion a year. The figures appear in a […]

READ MORE →

Banking Secrecy in China, its related territories and Taiwan

Hong Kong from Sky 100Foreword. The Tax Justice Network is a non partisan network of experts working towards transparency, so we do not take any position about countries’ territorial and political claims. However, we do expect countries with a de jure (legal) or de facto (in practice) influence over other territories, to take responsibility for their power. We point […]

READ MORE →

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to Top