Draft Bank for International Settlements (Immunities and Privileges) Order 2021

Stephen Doughty Excerpts

Tuesday 9th February 2021 General Committees

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

It is a pleasure to see you in the Chair, Dr Huq.

As the Minister said, the order is simply designed to put in place the standard diplomatic immunities and privileges that go with the establishment of any international institution in the UK. The Opposition will not vote against it, but I have a number of questions.

The UK is a global leader in financial innovation and technology, and the Bank of England’s success in bidding to host the Bank for International Settlements Innovation Hub reflects our continued high standing. Technology is of course changing all aspects of the global economy, including in the global south, and technology will play a crucial role in ensuring that financial systems are effective, resilient and inclusive. It is also crucial to our economy, and we are at the forefront of many FinTech innovations. The establishment of the UK hub will allow us to collaborate with many others to innovate through research and other technical means.

The Bank for International Settlements is one of the world’s oldest financial institutions. It has played a significant role as the bank to central banks for more 90 years, from the central banks gold pool co-ordination during the early days of the Bretton Woods system through to supporting monetary co-operation among European Community central banks. It has also played a supportive role in many active financial co-operation initiatives and continues to do so, including working on new opportunities presented by environmentally friendly and green investment technologies. The Opposition are very happy to see the Bank for International Settlements establish a hub in the UK, and support the granting of the appropriate immunities and privileges.

We have seen some issues in the past associated with diplomatic status in the UK being abused or not used appropriately. Some examples have related to very serious cases, and others have related to the payment of parking charges and the congestion charge in London. How will the new immunities work? I note that the order contains an exemption relating to traffic penalties, but what is the Government’s standard on all such institutions? London is a hub, and we host many international bodies, including the International Maritime Organisation just across the river from us, so what is the Government’s policy on immunities?

The order allows for the exercise for the first time of the powers in section 12 of the International Development Act 2002. Can the Minister confirm whether any further regulations will be invoked under those powers? Can the Minister confirm that the host country agreement is similar to those put in place wherever the BIS has opened hubs around the world? Are we doing anything different from those other locations where it has established hubs or offices? Will any specific funding or resources be provided to the BIS by the UK Government, for example the use of property or any grant funding? Will any of that be earmarked as official development assistance spending? How will the activities of the London hub be made transparent and accountable, so that we understand the type of work it carries out? I am sure that there is much that we will want to welcome, but many questions surround some of the more negative aspects of international financial technology. We have heard some lively debates in the past few days about crypto currencies and trading based on Reddit tips and so on. I am assuming that the BIS hub will look at the positive ways in which innovation in FinTech can be used for the benefit not just of this country but globally, including those countries currently excluded from many financial processes. How will the hub balance those positive and potential negative aspects of FinTech?

The past three decades have seen the significant internationalisation of the BIS from its original European focus, but Europeans still account for 50% of its membership. Of the rest of the world, the number of countries with central banks and monetary authorities stands at five from South America, three from Africa and two from Oceania. The majority of the developing world across the global south is simply not represented. Will the UK as a member organisation of the BIS and as a host of the hub push for greater global representation to ensure that the work of the bank is fully inclusive?

We support the order and the standard process it represents, but I would appreciate some answers from the Minister to my questions.