There is a well-known joke, (told only by the British), that if you Google the words, “French military victory”, that the search engine returns with the message “no results found”. I was put in mind of this when I was gathering my thoughts for this article, and Googled “financial heritage”. Not quite “no results found”, but the only website even discussing the concept was our own, www.jerseyfinance.je/50 Perhaps it’s not entirely surprising during a time when anti-finance sentiment is still palpable following the impact of the credit crisis, but still, I expected something at least!
Other industries were conversely, and rightly, celebrated in the extreme, from tourism, to farming, to coal-mining – even the history of the plastics industry, often a controversial subject from an environmental perspective, was spoken of in glowing terms.
So I am now writing this article partly because of the timely, 50th anniversary of our own international financial services industry, partly because I feel that there are very positive things to celebrate about finance (no matter how unfashionable in some circles) and partly, because I’d like the whole idea to have a better Google ranking. But I am also writing, because the more I considered it, the more I found myself inspired by the idea that Jersey’s finance industry represents the first time, as a country, that we have exported our intellectual capital, instead of a tangible good.
Jersey has been provided for by a diverse array of industries over the centuries – cider was a significant export for 300 years, knitting for 250 years, cod fishing for 150 and tourism more recently over the past century has been an important part of the economy. All of these industries require geographical space and natural resource, on an island limited by size, and all of them have, unfortunately, been outpaced by cheaper competition over the years. So why won’t the finance industry decline in the same way?
Well mainly because we are selling an intellectual offering, rather than tangible goods. Jersey can provide and do business around the world based on our expertise, rather than our geographical and logistical abilities, and although there are undoubted challenges ahead, ultimately, the reach and potential of financial services are as limitless as our imaginations allow. Also, because whichever way I look at it, 2011 is a very unique and special year for Jersey.
It is the 50th anniversary of Jersey’s international financial services industry, and a year where many world economies find themselves faced with some of their greatest challenges following the ongoing impact of the recent credit crisis. However, any crisis also provides a chance to seize some of the greatest opportunities, which we can now do, by diversifying into new markets, innovating our product offering and promoting Jersey to new investors and clients.
When the City of London went through the highly destructive atrocity of The Blitz during World War II, it was a time of unimaginable devastation. But, through determination and courage, London used this as an opportunity to rebuild its City, and go on to become on of the world’s most successful financial centres. Ironically, World War II also became an opportunity for New York to rebuild financially after the Great Depression, moving away from its industrial roots towards a service-based economy. Jersey itself endured the terror of its German Occupation and went on to build a thriving tourism industry, and then a financial one.
Since then, we have learned over the past fifty years that Jersey’s finance industry can adjust to meet market and political pressures positively. For example, while our long-term market in the UK is still very important to us, we have begun to diversify and explore opportunities in new, emerging markets. In recent years, we have established representation in China, and in UAE and India, a reflection of this strategy, giving us greater global reach, diversification, and making us better equipped us to cope with any future, dramatic, global events.
Because of this ability to adapt, Jersey has come through these recent turbulent times in good shape – we have seen no bank failures, had no bank stability issues, and no major headline fund failures. We have proven, stable financial institutions, with deep pools of expertise, we have political and fiscal stability, with high levels of reserves, and the ability to stimulate our economy without recourse borrowing. We are a cooperative, transparent and well-regulated centre; arguably the best in the world. We have passed the most stringent international tests with flying colours, achieved the highest IMF rating in the world (above the UK, USA), demonstrated the importance of Jersey to London throughout the financial crisis (up-streaming billions of capital to the UK banking system) and we are the highest ranked offshore jurisdiction by the GFCI Index, as well as being an OECD “white list” centre.
With so many factors in our favour, there is no doubt that we have a bright, and exciting new future ahead of us, but it is also worth remembering, that it is our history of expertise and experience which makes it possible. The planning and foresight of the architects of our industry in the 1960’s, long ago created policies to develop and protect Jersey’s reputation, finding the right balance between complying with the international standards and creating a business environment that supported high-quality financial services.
We have come through the financial crisis and the global slowdown stronger, leaner and fitter. This year, as our modern finance industry turns 50 years old, it has never been so highly regarded or endorsed. New business gained globally in emerging markets will make us a bigger, deeper and more developed financial centre. This is not the time to fear for the future, it is the time for us to build on our success. Not only will Jersey’s finance industry still be here in another 50 years time, it will be doing better than ever. And I certainly hope to we will be exporting our intellectual capital for at least as long as we did our cider!