For the individual Member State, this is an opportunity to attract financial service providers from third countries who want to take advantage of the opportunity to establish themselves and market their products anywhere in the EU. Second, the single passport will also reduce the cost of doing business. It is in fact estimated that the Action Plan would reduce the cost of capital for 18 million businesses in the EU and drive down the cost of financial services for consumers. Conclusion Against this background it is not surprising that studies on the effects of enlargement show that growth rates would be higher under EU membership than under any other scenario. A European Commission study shows, for example, that during the first five years following accession, growth rates in the acceding countries would be between 1.7% and 3.2% above those that would be achieved if these 25 countries were to proceed with current reforms without joining the EU. A comparable finding also emerges for Malta: the annual growth rate would be between 1.7% and 1.9% higher in the short-run than it would be under the non-membership scenario. The difference would be even larger in subsequent years – Malta’s growth rates could then be between 4.4% and 6.1% higher under EU membership. Such findings and related considerations have led governments, political parties, trade unions and academics from twelve European countries, large and small, islands and continental ones, to conclude that membership of the EU is on balance the best available response to the challenges posed by globalization.
On the other side of the Atlantic, one of those drawing breath was the then-Governor of the Bank of Canada, Mark Carney. I am not sure what Mark went on to do next. But it was not just internationally where the regulatory reform bandwagon was rolling. In the UK, the Vickers Commission reforms created a fire-break between banks’ services to the domestic economy and their other activities. Complexity scientists would have approved. And sweeping institutional reforms were also underway in the UK, with the FSA’s prudential responsibilities merged into the Bank and a new consumer protection agency, the Financial Conduct Authority (FCA), created. The return of prudential regulation to the Bank was not, fortunately, a reversion to the pre-1997 orthodoxy. The Global Financial Crisis had laid bare the costs of separating finance and the economy, the micro and macro – a separation that had also been a feature of the Bank in the past. Crisis needed to be the catalyst for change, forging a link between the Bank’s analytical brain and its regulatory hands. And so it was, with the creation of a new policy body, the Financial Policy Committee (FPC). The FPC was charged with safeguarding systemic risk in the UK using new macro-prudential tools. An interim FPC was set up in 2011 ahead of a new statutory framework being put in place. And the interim FPC gave way to a statutory FPC in 2013 when the new Financial Services Act came into place.