Arguments against international finance centres are ‘flawed’, new study finds

| June 9, 2014 | 0 Comments

A report on international financial flows has found that allegations that international finance centres allow significant illicit capital flows enabling individuals and multinational enterprise to avoid paying a “fair” amount of tax ‘rest on poor data and analysis, and on mistakes about how financial transactions, international taxation, and anti-money laundering rules actually work.’

The report, Moving Money, published by two world-renowned academics Professors Andrew Morriss and Richard Gordon, has shown that international financial centres like Jersey play an essential role in helping funds move around the global economy and increasing international investment.

Discussed at a Q&A event with the authors at the Pomme D’Or Hotel on 9th June (8am – 10.30am) in conjunction with Jersey Finance, the study also argues that demands for more regulation without considering cost and effectiveness rely on a belief that international financial transactions are ‘assumed illegitimate unless tightly controlled, rather than primarily reflecting the normal, legitimate workings of an efficient market.’

Moving Money concludes that the reduction of trading barriers is helping both developed and developing countries. The World Trade Organisation (WTO) has found that the growth in trade has caused the doubling of income in ten developing countries with a total population of 1.5 billion, and that the overall annual growth in the world economy – an average of 1.9 per cent per year since World War II – is largely down to increased trade and global finance.

Professor Andrew Morriss is Chair in Law at the University of Alabama School of Law and Dean-designate at the Texas A&M University School of Law and is affiliated with a number of think tanks doing public policy work. Professor Richard Gordon is Director at the Institute for Global Security Law and Policy and Professor of Law at Case Western Reserve University, and teaches courses on financial sector regulation, international taxation, and financial integrity.

Chief Executive of Jersey Finance, Geoff Cook commented:
“This report presents a much needed balanced view of the role of international financial centres in facilitating cross-border finance, safeguarding investments, and contributing to the global economy. Public opinion around international finance is swayed by over-heated rhetoric and calculations often not based on fact, as rigorously demonstrated in this report. Some discussions around tax evasion distract from the crucial debate around tax policy and international business, which should be based on the economic underpinnings and not baseless arguments.

“Moving Money is an extremely important contribution to the global debate in this area, and certainly the points raised in this report, particularly around the beneficial role of international finance centres in the cross-border movement of money and the high regulatory standards to which centres can adhere, are very familiar to us here in Jersey.”

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Category: Finance & Business

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