Bank for International Settlements (Immunities and Privileges) Order 2021

Baroness Northover Excerpts

Wednesday 10th February 2021 Grand Committee

[Baroness Northover (LD) [V]]

My Lords, I welcome this statutory instrument and thank the Minister for introducing it. I realise that this is an administrative matter, so that this hub can be set up here with the relevant immunities and privileges required, although I note some of the concerns that other noble Lords have expressed. I am sure that the noble Lord, Lord Kirkhope, is right: if we can offer all these advantages then we should surely be offering due regard to the EU ambassador. I look forward to the Minister’s update on that.

Like other noble Lords, I welcome the fact that the Bank of England has made this successful bid to host the Bank for International Settlements innovation hub in the United Kingdom. As the Minister said, the BIS is an international financial institution, headquartered in Basel, assisting central banks in the interests of global monetary and financial stability. As the Explanatory Notes say, the main activities are supporting discussion between central banks, producing research, and assisting central banks’ financial operations. I noted that its membership currently includes 62 central banks and monetary authorities from both advanced and developing economies. That is not every central bank of course, as the noble Lord, Lord Kirkhope, noted. I would be very interested in seeing which countries are involved, and which are not. When DfID existed, did we encourage central banks in countries that we supported, for example in Africa, to join this? I would certainly hope so.

We certainly know how important financial co-ordination is, not least from the global effect of the 2008 financial crisis. We face new challenges now, with the economic effects worldwide of coronavirus and the speeding up of the adoption of new technology. New technology has often leap-frogged in Africa, not least with mobile money, from M-Pesa onwards, and it is vital that there are global discussions which help to underpin financial stability.

We now have cryptocurrencies moving fast, particularly in developing countries, and we know the risk here and how they may conceal corrupt payments. The noble Baroness, Lady Wheatcroft, is surely right that they need to be regulated. There are many new challenges.

I note that the hub states that it aims, among other things, to act as a focal point for sharing best practices with regulators in developing countries. Can the Minister say how that information will be disseminated? It was an irony of the Brexit discussions, as many have noted, that fishing played a large part but our financial sector so small a part in the discussions. Given that the Minister has just stated that the fintech sector alone is worth nearly £11 billion a year to the UK economy and that the UK is indeed a world leader in this area, that was astonishing. The DIT has just held a UK-Africa fintech summit, at which the noble Lord, Lord Grimstone, noted that

“the financial services sector is a key primary driver of a nation’s economy. There is a strong correlation between economic development and the depth of their financial and professional services sector.”

Indeed so.

I note that there are two BIS representative offices, one in Hong Kong and one in Mexico. Can the Minister tell us whether the one in Hong Kong looks secure in current circumstances? I also note that, between 2020 and 2022, it is planned that centres will open not only in London but in Toronto, Frankfurt, Paris and Stockholm, and that they will form a strategic partnership with the Federal Reserve in New York. What are the implications for London of those other European centres? How will that work?

The Governor of the Bank of England, Andrew Bailey, said in relation to this hub:

“Now more than ever it is important the central banking community does all it can to build a more effective, resilient and inclusive financial system, and technology is an important part of that effort.”


He argues that the hub will provide

“an important venue to ensure the UK’s deep expertise in innovation can contribute to solving global financial issues.”

We all certainly hope that this expertise will continue to develop for the economic future of the United Kingdom.

I come to the immigration provisions in perhaps an opposite way from the noble Baroness, Lady Wheatcroft. Can the Minister assure me that there will not be restrictions on who might be recruited to work at this hub, and that it will not be affected by the new Immigration Rules, which will have such a damaging effect on being able to attract technical support from EU citizens whose salaries may not be above the requisite level? I hope that the UK will become more responsive to the rest of the City of London and elsewhere in our economy in our being able to attract people in whose salaries may be below the levels we are stipulating.

I certainly hope that this new hub prospers and I look forward to the Minister’s response.