Banking Crisis - Treasury Contents

Supplementary memorandum from the Guernsey Financial Services Commission

  Further to the Commission's previous submission, and the oral evidence I gave on 3 February, I am writing in relation to a question asked by Sir Peter Viggers to confirm that the Commission has no objection to the Committee obtaining from the FSA the details of any dialogue or correspondence with the Commission concerning the banking crisis.

  I would like to add the following context to the comments I made on 3 February about the need to recognise how important it is to ensure effective cross-border regulatory cooperation. Without such cooperation, both in normal times and at times of crises, it becomes virtually impossible to protect depositors with an institution in one jurisdiction if that institution has operations in other jurisdictions. The danger, not only to depositors but also to international finance and trade, is that in the absence of effective cooperation jurisdictions will have little alternative to adopting protectionist policies involving the ring-fencing of assets and capital and the curbing of cross-border activities. Such measures would raise costs, reduce flexibility, and make global recovery and growth much more difficult.

  This is a major issue for all jurisdictions, not just for Guernsey and the UK. I n my capacity as a member of the Executive Committee (the governing body) of the International Association of Insurance Supervisors (IAIS), I am aware that a considerable amount of work to address the problem of poor cross-border regulatory cooperation is being carried out by the Financial Stability Forum, the Basel Committee on Banking Supervision, the International Organization of Securities Commissions and the IAIS itself. During meetings in Brussels last week, I met representatives of the European Commission, the Geneva Association (which represents the largest international insurance groups) and a number of senior international regulators. They all identified the problem of achieving effective cross-border regulatory cooperation as one of the main issues to be addressed as a matter of urgency. What is needed in concerted international action to remove the legal, political and attitudinal barriers which currently exist.

6 February 2009

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