Ministerial Statement by the Premier and Minister of Finance, The Hon. David Burt, JP, MP
Mr. Speaker, this Government is on the cusp of marking one full year in office. These eleven months have been a non-stop effort to deliver on what we promised the people of Bermuda and what they in turn gave a resounding mandate of support. Mr. Speaker, while there are some easy, short-term fixes for the issues in our community, our responsibility as the Government is to take the long view and lay a foundation on which we can build the prosperity of future generations. This includes building the necessary capacity for Bermudians to properly reap the benefits of growth in this economy.
Mr. Speaker, Honourable Members and the public will recall that in the 2017 Speech from the Throne we set out our vision for this country and it is succinctly contained in the following extract from that document:
“The core of the Government’s philosophy is focused on growing the economy while empowering all Bermudians to become full participants in the economic miracle that is Bermuda. The Government will ensure that Bermuda’s success in attracting the most innovative companies from around the globe to Bermuda is increased and that the quality of life for Bermudians is also enhanced by the presence of those companies.”
Mr. Speaker, that is exactly what we have been doing in the area of FinTech and distributed ledger technology. The world’s leaders in this area have been attracted to Bermuda directly as a result of the foundation we have laid legislatively and in the regulatory space. The ‘ICO Bill’ and the Digital Asset Business Act, both passed in this Honourable House have set the stage for the increased incorporations and growing commitment to doing business in Bermuda by the most innovative companies from around the globe.
Mr. Speaker, the business conducted by these companies is not traditional. It does not fit the mold of what we have come to know as Bermuda’s traditional model and as such there an understandable resistance to providing the measure of support and services which might ordinarily apply in a new growth industry. One such service is banking. In the wake of the global financial crisis and the ever-broadening risk mitigation strategies, banks are increasingly risk-averse. Mr. Speaker, while that is understandable, as given their risk tolerances, to date local banks have been unwilling to offer services to newly incorporated FinTech and distributed ledger technology companies.
Mr. Speaker, the simple fact of the matter is that the FinTech industry’s success globally depends on the ability of the businesses operating in this space to enjoy necessary banking services. In other jurisdictions, banking has been the greatest challenge and for us in Bermuda, it is equally so and must be resolved.
Mr. Speaker, resolving this problem has in fact yielded greater opportunity. In our 2017 Platform, we promised to:
“Develop domestic capital markets that create local investment vehicles for Bermudians to invest in Bermuda. We must provide the banks with competition and allow local entrepreneurs alternative access to capital thus boosting local business.”
The steps I announce today move us closer to realising the fulfillment of that promise. Mr. Speaker, Bermudians need options in banking; the FinTech industry needs an innovative, robust banking solution. Those needs are not mutually exclusive and this Government is prepared to take the steps necessary to achieve both goals.
Therefore, Mr. Speaker, I am pleased to advise this Honourable House and the public that I will shortly table in this Honourable House, a Bill that will make amendments to the Banks and Deposit Companies Act 1999 to create a new class of bank.
Mr. Speaker, it is important for Honourable Members to be aware that prior to introducing the legislation to regulate digital asset businesses, my colleague, the Minister of National Security, along with a technical team, consulted with the Bermuda Bankers’ Association (BBA), outlining the Government’s plans to position Bermuda as a premier jurisdiction for distributed ledger technology. The response received from the BBA was commensurate with their ongoing need to manage their risks to continue to operate in accordance with their existing correspondent banking relationships.
Their reticence, no matter how well-founded, cannot be allowed to frustrate the delivery on our promise of economic growth and success for Bermudians. To ensure that the Government is able to effectively execute on its FinTech initiatives, as well as encourage responsible FinTech innovation that provides fair access to financial services and fair treatment of consumers, the Banks and Deposit Companies Act 1999 will be amended to allow for a new class of bank that will provide banking services to Bermuda based FinTech companies.
Mr. Speaker, I am grateful to the Bermuda Monetary Authority who have advised on these proposals and have confirmed that in order to achieve these objectives the Act should be amended as follows:
- including a new class of license that may be granted by the BMA called a Restricted Banking License;
- adding a new Schedule to the Act that outlines the types of business undertakings that Restricted Banks can service, together with a provision that permits the Minister of Finance, after consultation with the BMA, to amend the business activities from time to time to encompass new innovative businesses;
Mr. Speaker, these amendments will allow for local and international participants to fill a critical need in servicing FinTech companies. However, it is not only FinTech companies that need more banking options, Mr. & Mrs. Bermuda should have more choice and more competition. Therefore, consistent with the pledge made in this year’s Budget Statement, the Ministry of Finance has commenced consultation on expanding the types of banks that can operate in Bermuda. Reform of our domestic banking sector is necessary to reduce costs for Bermudians, while providing more opportunities for Bermudians to work and more access to capital enabling more Bermudians to become owners and not just employees.
Mr. Speaker, our traditional banks, those household names, have played their part in this community over many years. It is a fact of business and a fact of life that survival and growth can only be achieved through an ability to evolve and innovate. Legacy industries the world over have lost that ability and the future belongs to those who can quickly lay a foundation for growth, respond to emerging trends and preserve a reputation for sound management in the process. For countries it is no different, Bermuda must be nimble or we will be left behind.
Mr. Speaker, the people of Bermuda demanded change in 2017 and spoke loudly of the need to transcend the transactional and deliver a transformational agenda. The proposals outlined today are a critical first step towards broadening banking services and is another step forward in the commitment we made to building a better and fairer Bermuda.
Thank you, Mr. Speaker.