Jake'S View | London and Hong Kong set to ignore EU money-laundering rules
The European Union proposed a tax on financial transactions that could be collected worldwide as soon as next year by the 11 countries that have so far signed up to participate. To escape the proposed tax entirely, firms in other countries would have to cease financial services business with the 11 countries involved.
This one has actually been in the works for some time. It's news only because the EU chose Valentine's Day to confirm that it is going ahead with this beauty.
It's a beauty because it's custom-made for what Hong Kong has traditionally done best, which is offer reliable corporate services at low cost and look the other way when that is the option most likely to avoid trouble. We may, of course, continue making noises to the effect that we are utterly opposed to money laundering but, as long as we don't mean what we say, everything should be fine and a new line of service exports open to us.
Let's review what the EU has done here. First, it introduced a single currency under a regime that imposed strict limits on the fiscal deficits that any member country could incur and counted on their honesty to report their fiscal positions accurately.
In the event no member stayed within the limits and some of them, most notably Greece, reported dishonestly. When this had the predictable result of bringing about a financial crisis, the European Central Bank, set up as the independent guardian of the euro, surrendered its independence at the first push.
It instead made itself a lender of last resort to irresponsible governments, ran its debt load up to gargantuan levels and induced private lenders to join it in rewarding irresponsibility by forgiving massive amounts of member country fiscal debt.
