Cross-border regulatory co-operation must be strengthened in future or jurisdictions will be forced to adopt protectionist policies, warns Guernsey's chief minister.
Speaking at the City of London Corporation Finance Committee Dinner, Lyndon Trott says cross-border regulatory co-operation will be more important in the future than ever before.
Addressing members of the Common Council of the City of London Corporation as well as players from governance, finance, law and commerce, Trott says: "Without such co-operation, both in normal times and at times of crisis, it becomes virtually impossible to protect investments such as banking depositors with an institution in one jurisdiction if that institution has operations in other jurisdictions where activities and subsequent risks are not understood or shared."
"The danger is not only to investors but also to international finance and trade is that in the absence of effective co-operation, jurisdictions will have little alternative to adopting protectionist policies, involving the ring-fencing of assets and capital and the curbing of cross border activities."
Trott believes protectionist measures would reduce flexibility, raise costs and make growth and global recovery from the downturn more difficult.
Although politicians have a role in combating the downturn, Trott says ultimately, it is in the hands of financial markets and financial service providers and regulators.
"The solution to the present problems is certainly not to move away from a healthy capitalist society - just the opposite - the solution is to retain a healthy capitalist society but to remove the excesses and errors of the past," he says.
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