Tag Archives: Guernsey

Glocal Finance: bounded forms of global financial capitalism

By Fiona Ferbrache

Warehouses being built adjacent to airport runways may be used as 'freeports' to store valuable goods

Warehouses being built adjacent to airport runways may be used as ‘freeports’ to store valuable goods

Entrepôts, freeports, bonded warehouses… these terms refer to special economic zones in which regulations are relatively relaxed in comparison with those of surrounding jurisdictions.  Such spaces are often part of international trading networks and may be analysed to gain insight to financial relations across and within bounded spaces. 

Guernsey (Channel Islands) is one example of an historical entrepôt. During the 17th and 18th centuries, it developed a key role in Anglo-French trade in wine, spirits and tobacco. Not only was the island strategically located between France and England, but it was used by both countries, at different time, to reduce the costs of import/export. Today, Guernsey provides another example of a special economic zone through status as an offshore financial centre.  The attractions of such spaces (security, tax advantages (relative to mainland jurisdictions) and confidentiality) are also found in a growing number of  freeports.

Freeports refer to repositories at airports that are becoming increasingly popular places to store and trade valuable or luxury goods.  You can read about them in a recent article from The Economist (2013).  Goods may arrive by plane, be transported to freeport warehouse (literally alongside the runway), and then traded without incurring import or other taxation duties.  This occurs partly because goods in freeports can be considered ‘in transit’ – neither ‘here’ nor ‘there’ (another interesting link for geographers might be how this connects with ‘mobilities’). 

The Economist suggests that rising interest in freeports is entangled with global processes and regulations that have evolved since the start of the financial crisis.  It is here that I wish to make a link with a new TIBG paper by Hendrike and Sidaway (2013), and their exploration of how the global financial crisis was mediated in one very specific place: Pforzheim, southwest Germany. Pforzheim is  treated as a ‘glocal’ display of the crisis in which financial decisions were taken at the local level but complexly interlinked with broader processes and structures of financial capitalism. Through this study, Hendrike and Sidaway provide a symptomatic example of how the financial crisis was mediated through particular scales and polity. 

It is not the intention here to present these spaces as negative or deviant, but as localised or ‘bounded spaces’ in an interconnected world.  A commonality between entrepôts, freeports and Pforzheim, is the way in which global issues (such as the financial crisis or trade networks) are interpreted, negotiated and contested through bounded spaces; examination of which can inform out understanding or broader processes and structures.

 Hendrikse, R.P. & Sidaway, J.D. 2013 Financial wizardry and the Golden City: tracking the financial crisis through Pforzheim, Germany. Transactions of the Institute of British Geographers. DOI: 10.1111/tran.12024

books_icon  Aalbers, M. (2009) Geographies of the financial crisis. Area. 41(1): 34-42

books_icon  Derudder, B., Hoyler, M. & Taylor, P. (2011) Goodbye Reykjavik: international banking centres and the global financial crisis. Area. 43(2): 173-182

60-world2 The Economist (2013) Freeports: Uber-warehouses for the ultra-rich.

60-world2  The New York Times (2012) Swiss Freeports are home for a growing treasury of art

The Geography of International Banking

by Fiona Ferbrache

St Peter Port, the heart of Guernsey's finance industry. Source: E.Ferbrache

The 2008 global financial crisis has had major impact on the geography of international banking centres (IBCs).  In a forthcoming Area article, Derudder et al. analyse how leading IBCs have fared as a result of this financial crisis.  While they argue that a broad geographical pattern emerges, revealing a shift from West to East (where IBCs faring best are located outside North America and Europe, and inside Asia ), they also provide a more nuanced analysis that indicates certain western centres hosting some of the strongest performing banks (e.g. Sydney and Santander).  The rise or fall of IBCs is often connected to the collapse or take over of specific banks, for example Derudder et al.’s article is entitled “Goodbye Reykjavik”, as this city disappears from the IBC map after the collapse of all three of its major banks (Kaupthing, Landsbanki and Glitnir).

Other IBCs have been impacted by the Icelandic collapse and I was left pondering how international offshore financial centres (OFCs) might fit onto this map?  The Channel Island of Guernsey is one such OFC with a finance industry reported to be in “good health” and “robust shape”, with financial funds reaching record highs in 2010 (Guernsey Finance, 2010).  However, the Island’s relative resilience during and after the financial crisis is connected with its diversity of financial industries; fiduciary services, insurances, investments funds, asset management, and banking.  It is banking, however, that presents the most varied scenario with some banks reporting increased deposit levels and others reporting lower levels (see, GFSC, below).

Derudder et al. reveal how mapping the global financial crisis is a complex and important process for financial centres (OFCs in particular) (should) remain closely connected to territorial states.

Derudder, B., Hoyler, M. & Taylor, P. (Forthcoming) Goodbye Reykjavik: international banking centres and the global financial crisis.  Area.

Guernsey Finance (2010) Guernsey’s finance industry ‘is in good health’ http://www.guernseyfinance.com/news_room/guernseys-finance-industry-good-health 08 August, 2010

Guernsey Financial Services Commission (GFSC) www.gfsc.gg