Tag: Financial regulation

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Terrorism

Banks, Authorities, and CTF: A Missed Opportunity and Security Weakness

Wallet and Credit Cards
Photo: United States Navy/Wikimedia Commons.

A recent ISN blog by Owen Frazer highlighted the implications of the post-9/11 ‘Financial War on Terror’ for civil society groups as they grapple with the vulnerability global authorities believe they represent in the struggle against terrorism. But there is a third, critical party in this field that is not often contemplated from a security perspective, namely the Financial Services Industry (‘FSI’).

Following 9/11, the first step of the Bush administration’s ‘War on Terror’ was to sign Executive Order 13224, which aimed to launch ‘a strike on the financial foundation of the global terror network’ in order to ‘starve the terrorists of funding.’ This assault was led by the Financial Action Task Force (‘FATF’), a body originally set up in 1989 to co-ordinate a global response to the laundering of drug money through the banking system. Adding counter-terrorist financing (CTF) to the mandate of the FATF seemed logical at the time, and the Task Force expanded its original 40 Recommendations to include 9 Special Recommendations focused on CTF.  These additional recommendations were recently revised and amalgamated to create a new set of 40 Special Recommendations. In effect, this regime has led global authorities to delegate the frontline implementation of CTF policies to the FSI.

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Business and Finance

Now, Seriously: Financial Transaction Tax

A tax that won't hurt, except for gamblers. Image: artuemuestra/flickr

Liberal-minded economists are usually skeptical of taxation: taxes distort markets and lead to the inefficient allocation of resources. However, some taxes are better than others, and financial transaction taxes, such as the Tobin Tax, are certainly in that category.

Now, the European Commission is getting serious about introducing a financial transaction tax. Their proposal: levy a tax of 0.1% on every financial securities transaction performed by a financial institution based in the EU.

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Uncategorized

Switzerland – Failing to Deal with Too-Big-To-Fail?

A lot of numbers to keep track of - stock market news at a UBS branch in Zurich. Courtesy of belpo/flickr.
A lot of numbers to keep track of – stock market news at a UBS branch in Zurich. Courtesy of belpo/flickr.

World-renowned for its delicious chocolate, accurate watches and safe bank accounts, Switzerland considers itself an island of political and economic stability at the heart of Europe. As a measure of success, the Swiss economy survived the 2008-09 financial crisis experiencing fewer devastating consequences than other industrial countries. Switzerland was not completely immune however, as the government had to come to the rescue of the financial industry in the fall of 2008.

Fearful of the potential fallout if banking giant UBS declared bankruptcy, the Swiss government deemed it necessary to bail it out in October 2008. The rescue package included a $6 billion convertible bond issued by the government and the establishment of a fund, supported by the Swiss National Bank, into which UBS transferred toxic assets once worth around $60 billion. In view of an annual GDP of roughly $550 billion the Swiss public entered a huge financial risk by saving UBS.

Since then, the Swiss economy seems to be back on track with slow but positive GDP growth. As immigration and energy issues dominate the media in anticipation of upcoming national elections, many seem to have forgotten about the complex and unresolved risks regarding the financial sector: Banks like Credit Suisse and UBS could still push the economy on the verge of collapse: They remain ‘too-big-to-fail” and profit therefore from an implicit state guarantee.

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Categories
Business and Finance

Swiss International Studies, Migration and Finance

Swiss Network for International Studies / snis.ch
Swiss Network for International Studies / snis.ch

I’m writing from Bern, where I’m attending the Swiss Network for International Studies‘ (SNIS) first yearly conference. The Network was established two years ago to promote interdisciplinary research in issues of international relevance among Swiss academics.

The international relations field is still pretty new at Swiss universities. It might well be a corollary of the fact that, for much of the past century, the country’s neutrality in international politics boiled down to passivity. Several speakers at the first day of the conference reminded us that Switzerland only joined the UN in 2002.

In any case, the young Swiss’ interest in international affairs is exploding at the moment: A Geneva professor talked to me about the exponential rise in student numbers since his university launched an undergraduate program in international relations.

Here are two highlights from the first day of the conference – based on my own biased personal interests…

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