Innovation built on solid foundations: How Jersey’s financial sector continues to deliver for the UK and global economies
It has been 60 years since the birth of Jersey’s modern financial services industry. Over those six decades, the island has developed into an award-winning international finance centre, that adds significant value to both the UK and global economies. The House sat down with Joe Moynihan, CEO of Jersey Finance, to reflect on the journey so far and to discuss the challenges that lie ahead.
Jersey is small. You could walk from one side of the island to the other in a couple of hours. But its geographical size belies the importance that the island plays as a key financial engine for the world’s economy.
The transformation of a tiny island 85 miles south of the English coast into a global financial powerhouse is a remarkable story. Joe Moynihan knows more than most about the elements that have made Jersey’s success possible. Moynihan is the man at the helm of Jersey Finance, the body that represents and promotes the island’s finance sector.
When asked to identify the underlyingstrengths that have led to the financial sector developing such a presence in Jersey, Moynihan does not hesitate. “Stability and certainty,” he says. “International customers want to be in jurisdictions which have a good reputation and are well-regulated.”
It does not sound complicated but, as ever with international finance, behind that simple statement of fact lies a great deal of complexity and expertise. For Moynihan, these twin pillars of “stability and certainty” are underpinned by an independent legislative infrastructure and a robust regulatory regime. It is this solid, trusted foundation that has provided the basis for the island’s astonishing level of growth over the last sixty years.
“The incredible value that Jersey’s finance sector adds is felt all around the world, but it is particularly apparent in the UK. Jersey’s relationship with the UK is close and symbiotic. “
That growth delivers value not just to Jersey itself, but to the worldwide economy as a whole. The sheer scale of that contribution has recently been analysed by the Centre of Economics and Business Research (Cebr). Their landmark report quantifies Jersey’s contribution to global value chains, through the metrics of GDP, employment and wages.
The numbers are truly eye-watering. The research found that on average annually between 2017 to 2020, £1.4 trillion of capital was intermediated in Jersey, supporting £170.3 billion of global economic output, 5.1 million jobs worldwide, and £73.3 billion in associated wages.
The incredible value that Jersey’s finance sector adds is felt all around the world, but it is particularly apparent in the UK. Jersey’s relationship with the UK is close and symbiotic. During the period analysed by Cebr, the UK was the most significant source of capital, as well as the most significant destination of capital. The value chains that Jersey’s financial services sector supported contributed an average of £62 billion each year, representing an impressive 2.9% of total UK output. Not only that, UK employment was supported to the tune of over 950,000 jobs.
This strong partnership between Jersey’s financial sector and the UK economy is something that Moynihan sees on a micro- as well as a macro-level in his day-to-day work. “If we look at a piece of business that is planned to come to Jersey,” he tells us, “invariably, you will find that there is London expertise being used. There are huge complementary opportunities.”
“As the UK continues to strengthen its position as a Global Britain”, he says, “there are significant opportunities to work together and build on the existing relationship. This is particularly true as we look towards a post-pandemic era and to global economic and social recovery”.
Moynihan explains that the scale of Jersey’s ongoing global contribution would not be possible without solid foundations in place, the “good governance” that Moynihan pinpoints as being “part of the DNA of the Island’s industry”.
That foundation is what provides the basis for the enormous economic contribution that Jersey makes.
The value chains that Jersey’s financial services sector supported contributed an average of £62 billion each year, representing an impressive 2.9% of total UK output.
When asked whether the rapidly changing technological frameworks, that we see in the financial services industry, have the potential to undermine the “stability and certainty” he highlights as being so important, he shakes his head. Moynihan does not see innovation and stability as opposites, but as entirely complementary.
“To be perfectly honest, if we had not been innovative over the past 60 years we wouldn't be here,” he says with a smile. He highlights the range of areas where previous innovation made Jersey a “disruptor” before that term was even being widely used, including establishing new legislative and regulatory standards.
What is equally apparent is that the ability of Jersey’s financial sector to embrace innovation will be part of its future, not just its past. That ability to innovate, to respond to changing operating environments, is something that will be needed to support the world’s economy as it rebuilds after the disruption of the global pandemic.
“We have an important part to play in the recovery because of our ability to facilitate international investment,” Moynihan points out. “That international investment is going to be needed globally.”
Moynihan is clear that, whilst COVID has been hugely disruptive to the world’s economy, it is also an event that has accelerated innovation and new approaches. He shares the story of speaking with a bank CEO who told him that they had introduced more new technology during the pandemic than they had anticipated doing over the next five years.
That innovation and agility are now going to be vital, not just to support the post-pandemic recovery, but also to help find solutions to finance the critical challenges we face around climate change and the net-zero transition.
Moynihan is refreshingly honest in his assessment of the profile and status of the environment within the financial services sector historically. “Maybe in the past, it was something that was not on the priority list,” he admits.
However, he is equally clear that is now changing, with the Jersey financial sector now working with the government and the regulator on a roadmap to achieve their 2030 vision of being a sustainable international finance centre.
What comes across most clearly during our conversation is the way that Jersey has quietly innovated throughout its recent history to remain at the forefront of the international finance sector. This combination of innovation, built on a solid regulatory system, will provide the platform for Jersey’s global contribution to continue for the next 60 years.
The report ‘Jersey’s Contribution to Global Value Chains’, from Centre for Economic and Business Research, can be found at www.jerseyfinance.je/our-work/jerseys-contribution-to-global-value-chains/. You will be asked to create a login to access it.
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