HAMILTON, BERMUDA –Bermuda Monetary Authority (Authority or BMA) hosted the sixth meeting of the Financial Policy Council (Council or FPC) at its offices in Hamilton, Bermuda.
The Council, established in 2015, advises the Ministry of Finance and the Authority on financial system stability in Bermuda. Its purpose is to assess possible threats to Bermuda’s financial stability, and to identify policies and actions to mitigate or eliminate such threats. It also advises on the development of Bermuda’s financial stability framework and makes policy recommendations designed to support the general economic and financial well-being of the country. Members of the Council include the Premier and Minister of Finance the Hon. David Burt JP MP (Chair), Sir Andrew Large (Deputy Chair), Authority CEO Jeremy Cox, Sir Courtney Blackman, Michael Butt, Dame Amelia Fawcett and Gil Tucker.
At their meeting in November, Council members reviewed international developments and discussed the impact these might have on Bermuda’s financial stability. Council members addressed several of the issues arising from the release of “Paradise Papers”. FPC noted that Bermuda enjoys a longstanding history as a trusted jurisdiction, with the highest regulatory standards. Council members urged the Government and BMA to continue to pursue proactive international engagement efforts with Governmental and Financial Authorities aimed at promptly addressing risks emerging from the event.
Council members discussed recent developments related to the European Union’s initiative to develop a common system for listing of non-cooperative jurisdictions or ‘blacklist’. They stressed the importance of taking necessary action to avoid being put on the blacklist. Bermuda recognises the importance attached by the EU to clamping down on tax evasion and avoidance, and promoting fairer taxation. Bermuda believes that its regulatory and tax environment meets most of the expectations sought by the EU. Moreover, Bermuda has been an active participant in the OECD’s Tax Information Exchange Agreement and will continue to actively engage with the EU in order to reach mutual understanding on EU demands and on the most appropriate way of addressing these.
The FPC reviewed the impact on the Bermuda reinsurance industry of the recent active catastrophe season. Overall, while the unique frequency and severity of events was likely to affect the reinsurance sector’s profitability for 2017, it did not raise any concerns regarding the sector’s solvency. Council members also identified opportunities emerging, in particular in the alternative risk transfer segment, stressing the importance of BMA in continuing to show sensitivity and proactivity in respect to the sector’s speed to market needs. The Council also discussed other emerging opportunities in respect of pathways to growth for the island’s economy.
The Council also reviewed work underway by the National Anti-Money Laundering Committee (NAMLC) towards strengthening Bermuda’s anti-money laundering and counter terrorist financing framework in advance of the Caribbean Financial Action Task Force (CFATF) Mutual Evaluation of the island’s regime. As has been the case in previous FPC meetings, Council members emphasised the critical importance of a sound anti-money laundering and counter terrorist financing framework to Bermuda’s economic viability and welcomed the formation of a Cabinet Committee tasked, among other things, with monitoring progress in the development and implementation of Bermuda’s regime. Finally, members urged all relevant authorities to continue to attach priority and to assign adequate resources to ensuring its timely implementation so as to lead to a favourable assessment.
In addition, the following topics were discussed:
- Government’s short- and mid-term plans in respect to the management of its fiscal position and its stock of debt. FPC noted that this area is the subject of the Fiscal Responsibility Panel’s annual report.
- Recent developments in shadow banking, especially the work underway at the Financial Stability Board (FSB). Members discussed the work done at the recent regional FSB shadow banking workshop held in Bermuda on 25th and 26th October.
- The re-launch of the Bermuda First initiative, exploring ways in which FPC can provide input to help contribute to its success.
- Recent progress towards strengthening Bermuda’s recovery and resolution framework for its domestic banking sector, including the formation of a Banking Liaison Panel. FPC underlined the importance of making progress with further operationalisation of the Recovery and Resolution framework for banks.
Finally, the Chair noted that the meeting was the last one to be attended by Sir Courtney Blackman given that his term was coming to an end. The Premier thanked Sir Courtney Blackman, for his contribution to the work in FPC during its important start-up phase.
The Council’s next meeting is scheduled for early this year.