Plans to develop a National Digital Bank in Bermuda have been discussed by the Financial Policy Council. It welcomed the Government’s efforts to produce a feasibility study and business plan to assess its potential and viability.

It also recommended that this work should be undertaken by a suitably qualified and independent professional consultant, with special care taken in outlining the objectives of the bank, considering the commercial realities to avoid the bank becoming a burden on the state, and applying appropriate regulatory standards.

The Financial Policy Council (FPC) held its fifteenth meeting via teleconference. The meeting focused on pathways to sustainable growth in Bermuda, discussing both risks and opportunities emerging from the new economic conditions created domestically and globally by the Covid-19 pandemic.

FPC members welcomed the work under way to develop an Economic Recovery Plan, addressing the impact of Covid as a priority and which would be based on principles of fairness and equity for all Bermudians, financial viability where support is given, and fiscal prudence in managing Bermuda’s finances. Members stressed the importance of implementing effectively the recovery measures to be agreed to in this plan, as well as maintaining Bermuda’s competitiveness in the global arena.

The FPC is an advisory body supported by the Ministry of Finance and the Bermuda Monetary Authority. It was established in 2015. Its role is to assess possible threats to Bermuda’s financial stability, and to identify policies and actions to mitigate or eliminate such threats. It also advises the Government on the development of the financial stability framework in Bermuda, and makes policy recommendations designed to support the general economic and financial wellbeing of the country.

Curtis Dickinson, Minister of Finance, is the chairman of the FPC. The deputy chairman is Sir Andrew Large, a former deputy governor of the Bank of England.

At the latest meeting, in relation to the fast moving development of Central Bank Digital Currencies and stablecoins, the FPC noted the potential of these both to provide enhanced services for Bermudians, and to act as an intermediary for international developments in this space. FPC members looked forward to more in depth discussion on the issues at the next FPC meeting, scheduled for April, which would review both international developments as well as considering the implications for Bermuda, including opportunities and potential risks both macro and micro.

Members discussed the future of Bermuda’s banking sector, noting the island’s unusual and contrasting characteristic of hosting two distinct sub-sectors: international and domestic.

The CEOs of Bermuda banks, together with the Bermuda Bankers Association, attended FPC for a preliminary stock take of public policy and government priorities, and the issues these give rise to the banks. The intent to ensure continued dialogue on the issues as between banks and Government was welcomed, according to a statement.

In relation to tax matters, the FPC noted the Government’s two overriding priorities namely: firstly, to review and reform the domestic tax structure given the need for fiscal prudence and to underpin recovery, and secondly, to respond to the Organisation for Economic Cooperation and Development/European Union, set of initiatives on transparency and fairness.

If both aspects could be tackled holistically this might “provide an opportunity both to address domestic issues as well as persisting negative attitudes to the jurisdiction in the tax haven sense”. FPC members said they would be supportive of such an approach if it can be developed, whilst noting the need to ensure the attractiveness of Bermuda to the International Business sector as well as the inevitable impact on Bermudians.