1. Towards A New Economic Union – A 21st Century Hanseatic League?
MondoVisione – London
10 November 2016

2. The Hanseatic League versus the EU
Similarities
Differences
Strived to increase common security
Enforced common decisions
Worked to remove trade barriers
Founded on a common law
Geographic coherence: cities were chosen because of strategic locations along the trading routes (EU has also expanded strategically to the east and the north)
Drove progress across the Nordic and helped modernization of industry and trade
Helped economic development and growth based on free trade
The Ligue was focused on cities (not countries) and one city dominated (Lübeck)
The Ligue was focused on trade only (i.e. single purpose)
The focus was on trade in goods
It was a loosely managed association, not a political union or fiscal union
The Ligue did not provide for the free movement of people (apparently, you had to be from German parents’ descent)
The Ligue had a common language (German)

3. The Ligue faced similar challenges than the EU !
The rise of the nation states (nation states could provide security and protection from pirates which had been one of the key features of the Ligue).
big cities tended to dominate the Ligue (the same applies to the EU)
The decision-making process was largely based on consensus, there was a lack of accountability.
The fragmentation of territorial government failed to provide security.
At the end, cities tended to put their own short-term interest before the long- term common good of the Ligue.
The rise of Germany’s princes whose political powers rose and grew against the Ligue.
The difficulties to put together a coherent area focused solely on trading without promoting further integration - the Kontors were often physically separated through walls from the rest of the local population.

4. Rise vs decline of city-states ?
Possible rise in the number of city-state but not as financial hubs due to the limited fiscal capacity of a city-state. (Example: HSBC and Singapore)
Large players are not able to locate in City States because of the ‘Too big to safe’ issue. This prohibits the concentration of too many large banks is a jurisdiction with a small footprint.
Asian off-shore city-states have benefited from the access to mainland China. City States are unlikely to strive without a ‘Hinterland’ which tolerates their trade.
There is less tolerance among the richest nations towards offshore centers.
Following the 2008 crisis, sovereign nations have hit back at off-shore jurisdictions around the world. The US has imposed FATCA which imposes the automatic exchange of information. It does not hold for European financial centres which have strong ties with their national state.
The work of the OECD has contributed to increase transparency when it comes to taxation.

5. How might Brexit affect European city-states
Possible rise in the number of city-state but not as financial hubs due to the limited fiscal capacity of a city-state. (Example: HSBC and Singapore)
Large players are not able to locate in City States because of the ‘Too big to safe’ issue. This prohibits the concentration of too many large banks is a jurisdiction with a small footprint.
Asian off-shore city-states have benefited from the access to mainland China. City States are unlikely to strive without a ‘Hinterland’ which tolerates their trade.
There is less tolerance among the richest nations towards offshore centers.
Following the 2008 crisis, sovereign nations have hit back at off-shore jurisdictions around the world. The US has imposed FATCA which imposes the automatic exchange of information. It does not hold for European financial centres which have strong ties with their national state.
The work of the OECD has contributed to increase transparency when it comes to taxation.

6. Towards a European eco-system?
Could we connect the EU’s financial centers to become the world’s largest and most sophisticated financial centre?
Europe’s financial centres present a ‘specialism’ in financial services.
Could we aim towards a form of ‘coo-petition’ between them to arrive at one dynamic European financial centre?
Europe would need to take a new approach to regulation and cooperation with third countries such as Zürich (and the UK following Brexit)!
Key drivers of success: Level playing field, Open access, Fair tax competition, regulatory dialogue, quality and trust, infrastructure links
Centre
GFCI* rank 2016
Strength
London 1
Investment banking
Zurich 9
Wealth management
Luxembourg 12
Funds
Frankfurt 19
Post trade
Paris 29
Derivatives
Dublin 31
Amsterdam 33
HFT Trading
Clearing
(*) Global Financial Centres Index: The index provides ratings, rankings and profiles for financial centres, drawing on two separate sources of data – instrumental factors (Business Environment, Financial Sector Development, Infrastructure, Human Capital and Reputational Factors) and responses to an online survey.

7. Financial centres’ strength post BREXIT
Europe
Rest of the World
Switzerland
Luxembourg
London
New York
Singapore
Hong Kong
Dubai
Competition aspects
Considered criteria WM
Funds/AM
IB and AM
IB and AM WM
IB and WM WM
Financial Centre Strategy
Regulatory framework
High-quality advice
Independence
Clean-money strategy
Flexible regulatory approach
First Mover Advantages
RMB AM Hub
Universal and global trading centre
High importance of financial services
RMB Hub
Innovation centre
High importance of financial services
Stability
Privacy protection
Financial partners for the Chinese mainland
Geographical positioning as onshore financial centre betw. West and Far East
Marketing
Clarity of value drivers
No active marketing
Limited in terms of activities
Active marketing through «Lux for Finance (LFF)»
LFF as PPP1 headed finance
Active marketing and lobbying by the City of London
Limited marketing (traditionally known as a leading financial centre)
Active marketing as Asian centre for WM and commodity trading hub
Active marketing as a gateway to China
Renminbi Hub
International marketing for the capital market
Efficient taxation
Offshore for India
Institutional external representation
Positioning
Advertising measures/PR
Strong/positive
Activities
Business
segment
Neutral
Weak/negative
State/ Supervisor –
Banks cooperation
Stakeholder engagement
Stable regulatory and political framework
Liberal regulatory principles
Institutionalised cooperation (LFF)
Political and regul. framework stability
Efficient processes (Funds)
Systematic promotion of the fin. sector through policies and admin. actions
Political and regul framew. stability
Strong networking and industry lobbying
Political and regul framework stability
Governmental top-down requirem.
Political and regul framework stability
Efficient processes (licenses, Visa)
Institutionalised cooperation between industry and regulator
Governmental top-down control
Political and legal uncertainties
Adequacy of regulation
Stability of the legal framework
Stability of the political system
Market Access (EU)
Liquidity of capital markets
Country-specific solutions
New obstacles following adoption of MiFID II and EMIR
EU market access secured (EU)
EU market access secured (EU)
Good access to non-EU markets
No EU market target
Access to North and South America
No EU market target
Access to Asian markets
No EU market target
Access to China
No EU market target
Access to Saudi Arabia
Width of the product range
Derivatives and commodity exchanges
Trade and services centre
Tax issues
Attractiveness of personal taxes
Attractive tax location
International tax compliance in implementation
Attractive corporate taxation
No capital and personal income tax
Under pressure from EU following Luxleaks
Very attractive tax conditions for resident-non-domiciled people
Attractive tax conditions
Rigid application of tax law
Unilateral applicaton of FACTA
No inheritance, estate and gift taxes
Stict and reliable self-regulation
Restrictions on earnings, income and fortune generation control
Very attractive conditions for IPOs
No taxes or other restrictions with negative impact on the financial service sector
Income
Investment/capital income
Wealth
Attractiveness of corporate taxes
Transnational tax control/DBA
Infrastructure
Trade infrastructure
Good public infrastructures
High quality of life
Good education
Unclear Immigration Policy
Very good infrastructures for funds, limited to the capital market
Skilled labour force
Complete capital market infrastructure (e.g. Stock Exchanges, CCP)
Complete capital market infrastructure (e.g. Stock Exchanges, CCP)
State support of IT infrastructures (WIFI, cabling)
Capital market infrastructure (e.g. Stock Exchanges, CCP)
Physical commercial centre
High-quality financial infrastructures
Open Migration Policy
Clearing infrastructure
Availability of supply areas
Availability of skilled human capital