Ministers' fears over EU future

Thursday 13 November 2014

Uncertainty over Jersey’s future if the UK leaves the EU or moves closer to adopting the Euro has led ministers to agree to set up a new body to consider key questions about the economy.

During one of the final meetings of the last Council of Ministers, they gave the go-ahead to proposals for a “Monetary Authority” that would look at big issues and oversee the financial services regulator – a draft law will go before the new Council of Ministers and the new States, possibly next year.

The proposal was part of Senator Ian Gorst’s successful pitch for the Chief Minister’s job, he wrote that he would “progress the creation of a new overarching Monetary Authority”.

Elsewhere around the world, monetary authorities have responsibility for managing currencies or setting interest rates, as well as regulating financial services. But because Jersey uses the pound, currency and interest rate questions are not an issue here, and the Jersey Financial Services Commission has the task of regulating financial services.

The JFSC has declined to comment on the proposals for a monetary authority, but are unlikely to be pleased about the prospect of being subsumed by a new body.

Senator Gorst said that there were major economic questions – particularly relating to the UK’s relationship with the EU – that had to be considered, because they could have a profound effect on the Island.

He added that the Fiscal Policy Panel and the JFSC would sit within the new body, but that the central reason for putting it together was that Jersey’s non-party political system sometimes meant that politicians struggled to deal with major issues in an appropriate way.

Senator Gorst said: “The only thing that is certain over the next three years is going to be continued uncertainty in the international arena. We have managed incredibly well on setting the right course on transparency in the international arena and have used what could have been a challenge to our advantage.

“We are going to see other challenges. We cannot predict the outcome of the UK general election. We cannot predict whether there is going to be a referendum on Europe or not.

“If the Conservatives get into power and they cannot repatriate powers from Europe in the way that they want to, what are they going to do? Will that have issues for us from a financial and economic stability point of view? Let’s say the opposite happens and Labour get in, but want a referendum on even closer links with Europe?”

The idea of a Monetary Authority was first raised in 2008 in an IMF assessment of the Island – they said there was no body responsible for addressing issues of financial stability.