Don't miss




Dotard: an educational insult

Read more

#TECH 24

Medtech: Repairing the human body

Read more


Jennifer Lawrence on why she's unafraid to speak out

Read more

#THE 51%

Hola "Ellas Hoy" - The 51 Percent welcomes its sister show on FRANCE 24 Spanish

Read more


A stroll through the Corsican city of Calvi, jewel of the Mediterranean

Read more


The torment of Christians living in Syria’s Khabur valley

Read more


'Generation Merkel' yearns for continuity and stability

Read more


Amazon rainforest pays heavy price for Brazil's political crisis

Read more


Presidential election re-run pushed back to October 26th

Read more


'They hope to weather the storm by keeping a low profile'

Text by Marie Sophie JOUBERT

Latest update : 2009-03-31

Less than three weeks from the G20 summit, several countries have announced that they will relax their banking secrecy laws. Christian Stoffaës, a professor at Paris-Dauphine University, comments on the situation.

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.

Date created : 2009-03-13