HAMILTON, BERMUDA – The Financial Policy Council (FPC) will be holding its seventeenth meeting on July 23, 2021 via teleconference. Consistent with its mandate to provide advice on current and potential economic and financial developments and threats, items on the agenda will include discussions on international tax developments and a review of the key risks to Bermuda’s financial stability.
The sixteenth meeting, which was held on 6 May 2021, was also held via teleconference and all members were able to participate on that call. That meeting focused on strengthening and bringing together Bermuda’s private and public efforts that were underway as a response to the challenges posed by Covid-19. FPC Members discussed both the opportunities as well as the mitigation of risks emerging from the new economic conditions created domestically and globally by the pandemic.
In its May discussions, FPC members welcomed on-going government public health work aimed at containing the effects of the pandemic, including the comprehensive testing, vaccination programme, acknowledging that under the latter over 50% of Bermuda residents have received one dose of the vaccine, and 40% have been fully immunised (as of early May). It is intended that the significant progress made since May will be highlighted in the upcoming meeting to be held this Thursday.
On the economic response to Covid-19, FPC discussions at the May meeting, focused on the Economic Recovery Plan (ERP) presented to Parliament by Minister Dickinson on 22 March 2021. Members reviewed key initiatives under the ERP as well as arrangements in place to ensure successful implementation of the Plan and its intended goals of GDP growth, economic diversification and improvement of public finances. In this respect, the FPC highlighted the critical importance of project management to ensure joined-up work both between private and public partners and among the various public authorities involved in the execution of ERP. One area where it was suggested that more focus would be of value was improving the sources and use made of data, which can highlight quick wins and positive impact of initiatives. Members reinforced the importance of the ERP to benefit from continued leadership and commitment at the highest levels of government in order to implement a coherent communications strategy given the different interests of the many stakeholders, both Bermudian and international. Updates on the ongoing and focused work that is being done to advance this plan, will also be discussed in the upcoming meeting.
In the context of the ERP and with the goal of realising the opportunities for Bermuda that arise from the digitalization of financial services, several issues were highlighted in the May discussions, as well as relevant risks which need to be mitigated. Of particular focus was the Bermuda National Digital Bank; development in digital currencies and the role and work of the incumbent banks. In relation to the establishment of a Bermuda National Digital Bank (NDB), members acknowledged the potential opportunities for example of faster, cheaper and more inclusive services. It was further highlighted that success will require that standards of regulation should not be compromised and that risks to the reputation and financial stability of Bermuda are appropriately assessed and mitigated.
As noted above, FPC also reviewed in May, developments which had taken place prior to the May meeting, in digital currencies, including cryptocurrencies, stablecoins and central bank digital currencies (CBDC). Members discussed the implications of each with respect to the main features of money – acting as a means of payment, a store of value, and as a denominator of economic and fiscal activity. Technological innovations, market trends, and regulatory development in relation to digital money are all relevant. The role of the incumbent banks in providing services to Bermudians was also discussed with acknowledgement of their value, alongside the encouragement for them to embrace the changes and opportunities arising from the digital space. In all three instances, members encouraged government to continue to strengthen its dialogue and consultation as between those involved in fintech promotion with those involved with regulation, as well as with relevant private stakeholders.
Members will have the opportunity, in this week’s meeting, to review the significant work that Bermuda continues to do in relation to digital matters and to provide further input and advice in this regard.
Tax matters were a key item of discussion in May and in this regard, the FPC noted recent developments on both sides of the Atlantic, in particular the US and EU’s (European Union’s) renewed convergence towards supporting OECD (Organization for Economic Cooperation and Development) work on reforming the international tax architecture. During the May discussions, the members recommended, that to realise opportunities more broadly and avoid sanctions, Bermuda should increase its focus towards engagement and dialogue with US, UK, EU and OECD partners, building on the goodwill of successful engagement with them in recent years in areas such as money laundering, overall cooperation, and insurance equivalence. In this respect, FPC members urged government to continue with its strategic approach towards observing international principles and high standards both of disclosure and regulation. It was noted that these have served Bermuda well over recent years, and will be the bedrock for its success in realising opportunities looking ahead, and in particular in terms of acting as a substantial international financial and business centre.
Significant developments have taken place in relation to global tax matters since the May 6th meeting of the Council. Given the importance of the ongoing work that Bermuda is undertaking in this critical area, advice provided by Financial Policy Council members at this week’s meeting and otherwise, will certainly be a key input as the Ministry and Government continues to develop and implement its strategy in this regard. As noted in his recent ministerial statement on the OECD initiative, “In conjunction with industry and other key strategic partners, Bermuda will continue to look for opportunities and employ strategies that are beneficial to individuals and businesses and allow for our island home to effectively compete in this ever-changing marketplace.”
The Ministry looks forward to continuing its strong and positive working relationship with the members of the Financial Policy Council and anticipates that its deliberations at the meeting to be held this week Thursday, July 23rd, will once again provide valuable input to help shape Bermuda’s economic and financial policy.