Offshore Resource Says Banking In An Offshore Location May Make More Sense.
Specialists at offshoreresource.com have concurred with the idea of a pan-European
authority whose main task would be to deal with failed banks in a concerted effort to reduce strains on the regions post-crisis banking system. The proposal is rapidly gaining traction among economists and finance ministers throughout the European Union.Dominique Strauss-Kahn, the head of the International Monetary Fund (IMF), said that existing mechanisms for coping with the potential fallout from failed cross-border banks had clearly proved wholly inadequate.
Offshoreresource.com, which enables individuals and businesses to take advantage of the attractive tax benefits available to investors in offshore jurisdictions, said that such an authority would be able to tackle issues far more quickly and prevent a repeat of the drastic measures taken by the regions governments to combat the debilitating effects should a similar crisis occur in the future.
Europe needs a fire brigade, said Strauss-Kahn, to extinguish banking problems when they erupt, and intervene when things get out of hand.
Strauss-Kahn described risk-taking as an intrinsic facet of banking and said that it was imperative that the financial system be designed so that risks are contained while allowing the benefits to be harnessed.
Strauss-Kahn said that, in the interests of healthy competition, banks needed to be free to operate across borders, a point on which offshoreresource.com concurred but the firm believes that this kind of integrated banking system needs systems in place to prevent banking crises when they occur and bring them to resolution. Citing the lessons from the global crisis, Strauss-Kahn said banks' home and host countries would inevitably benefit from improved coordinated cooperation and control, as well as shared responsibility and answerability.
With this in mind, the creation of a European Resolution Authority has been planned to deal with failed banks in an orderly and "cost-effective way."
According to Strauss-Kahn, the new Authority would aim to ensure that any future losses are absorbed by shareholders and holders of equity, and by uninsured creditors rather than governments and taxpayers. He added that, as much as is possible, the mechanism should be pre-funded by the banking industry itself, including through deposit insurance fees and levies on financial institutions.
The crisis has hit ordinary people very hard, said Strauss-Kahn. Modest reforms that maintain a pretence of progress but continue business as usual are not sufficient.
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by: Mark Richmond