FRANCE 24: What do you think of the collective mea culpa from tax havens on the eve of the G20 summit?
 
Christian Stoffaës: Let’s not be mistaken - whatever the measures promised by tax havens, there will always be ways to get round regulations. These countries hope to weather the storm by keeping a low profile right now. It’s not the first storm they’ve come up against and they've always managed to ride it through. But the gale is a bit stronger this time and some risk getting caught. By accepting to relax the banking secrecy laws while hoping to escape the wrath of the G20 members, Belgium, Andorra and Liechtenstein have disrupted the united front  - solid until now - and forced Austria, Luxembourg and Switzerland to do the same.

Yet, it’s not because you ask someone to kill himself that he’ll do it. Not all of them want to follow the example of Iceland, which, after 20 years of specialising in offshore banking activities, was forced to return to cod fishing. Most of the world’s markets depend heavily on tax havens where most major banks have subsidiaries. Remember that the City in London produces 20% of the British GDP.
 

 

FRANCE 24: What responsibility do tax havens bear in the crisis?

C. S.: It’s a good thing to fight tax havens but you can’t blame them for the whole crisis. They’re easy targets like speculative funds, excessive bonuses for executives and credit rating agencies, but the origin of the crisis is somewhere else. The crisis started with banks that speculated well beyond their equity and insurers who were supposed to cover their stakes but didn't have the sufficient funds. The solvency of banking institutions was at the mercy of the lightest of market reversal turnaround. But the US, France and the UK needed a scapegoat and they found one in tax havens.
 

FRANCE 24: What’s the solution?

C. S.: I have a theory and it is that we need to separate the financial markets – a world of speculation – from the regulated sector. Banks should refocus on their real business. But let’s avoid establishing complete control over financial markets: not only is it not realistic but it would also be very bad for the economy.

Paul Volcker, the former boss of the Federal Reserve who now chairs the Economic Recovery Advisory Board at the White House, defended this same theory a few days ago. He supports the idea of bringing back the old 1933 Glass Steagall Act on the separation of deposit banks and financial markets which was repealed in 1999.