Pope Francis recently made headlines in the world of wealth planning for high-net-worth individuals by denouncing the practice of using offshore tax havens. The Vatican released a document in May 2018, which was approved by Pope Francis, that calls for more ethics in the global financial system. This document was the result of a collaboration between the social justice department and the doctrine office of the Vatican and aimed to deliver a solid moral foundation for the Vatican’s frequent call that changes must be made to the world’s financial system.
What the Document Denounced
Multiple parts of the current global financial system came under fire in the document released by the Vatican. In addition to the denouncement of offshore tax havens, the document denounced financial instruments like credit default swaps and derivatives. The Vatican referred to these financial instruments and offshore tax havens as unjust and immoral, saying that they hurt the poor of the world. Specifically, the document said that offshore financial activities are now used to recycle “dirty money” from illicit income, such as theft, corruption, fraud, war booties, mafia, and criminal associations.
Within the document, the Vatican pointed out that the recent financial crisis would have been the ideal time to create a new economy with a greater focus on ethics along with improved regulation of financial activities to counter the speculative and predatory aspects. The document additionally warns that deregulation may cause financial crises and bubbles.
Changes Encouraged by the Vatican
The recent document from the Vatican offered solutions in addition to denouncing the current state of the financial system. In it, Pope Francis and the rest of the Vatican called for banks to develop their own internal ethical committees. These committees would make sure that any decisions made are for the common good instead of the corporations and the high-net-worth individuals who run them. Additionally, the document encouraged the development of improved regulations for financial projects. The Vatican additionally included the suggestion that universities include ethics in their education of business leaders instead of focusing exclusively on profits.
What the Vatican and Former Popes Have Said
This is the not the first time the Vatican or Popes have spoken out against offshore tax havens and the current global financial system. In 2011, The social justice office of the Vatican suggested the creation of a global political authority that would regulate tax financial transactions and markets. That proposal was very poorly received, even within the Vatican itself.
The denouncement of income equality, offshore tax havens, and other aspects of our global financial system has, however, been a common theme among popes throughout the years. It has become a common occurrence for popes to denounce the idea of profit being the most important factor, regardless of cost, that seems to drive global capitalism. In fact, in 2008, Pope Benedict said that the financial crisis was largely due to offshore tax havens, explaining that they support “imprudent” financial and economic practices and lead to imbalanced development.
Pope Francis Has a Unique Focus
Although previous popes have indeed spoken out against current financial practices such as offshore bank accounts for tax-free funds, Pope Francis has a slightly different focus than his predecessors. The past two popes had focused more so on sexual morality and doctrinal orthodoxy, while Pope Francis tends to focus on the poor and social justice. Based on this document, this changing focus extends to the Vatican’s bureaucracy as well.
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