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Industry representatives in the British Virgin Islands are shouting it from the rooftops: BVI’s financial services sector is a boon to the global economy.
A recently released economic impact report commissioned by BVI Finance shows:
- 417,000 companies are registered in BVI
- The companies have US$1.5 trillion in global assets
- The sector supports 2.2 million jobs worldwide.
Impressive as the results are from our British colonial cousin (applause, applause), we are certain that a similar analysis of the Cayman Islands’ global impact would yield similar – perhaps larger – figures.
As a matter of fact, we happen to have at hand one such study, which was conducted by University of Amsterdam researcher Jan Fichtner, who wrote about his findings in the latest issue of our sister publication Cayman Financial Review (CFR), and which we also referred to in a story in the most recent issue of another Pinnacle Media publication, Grand Cayman Magazine.
If, as we would hope, local industry group Cayman Finance (our country’s counterpart to BVI Finance) is considering trumpeting the success of our all-important financial services sector, here are a few bullet points from Mr. Fichtner’s research that are well worth highlighting:
Cayman is home to US$4 trillion in investments from abroad
More than US$2.6 billion of that is in foreign portfolio investments, notably hedge funds
Cayman is not only a vital conduit to invest in U.S. financial markets, but also acts as a mechanism for “round-tripping” for U.S. investors who use Cayman-based funds to buy U.S. securities.
As Mr. Fichtner wrote in CFR, “In fact, when excluding U.S. long-term debt, of which the central banks from both Japan and China hold more than $1,000 billion each, Cayman is the largest holder of U.S. securities in the world.”
“Cayman is not a random exotic small island financial center but a key component of contemporary global finance,” he said.
“Hedge fund managers are extremely concentrated in New York and London, while most funds are legally domiciled in the Cayman Islands,” Mr. Fichtner wrote. “Actually, in this respect Cayman could be seen as a branch of or a special bookkeeping device for Wall Street and the City of London.”
During the span of two generations, Cayman’s financial services sector has transformed our islands from a forgotten (or never discovered) Caribbean backwater to a cosmopolitan destination, and propelled our standard of living from “subsistence-based” to “first-world.”
As our readers well know, the “Cayman miracle” has yielded innumerable benefits at home, including well-paying jobs, a robust economy, limitless opportunities for our young people and an enviable quality of life. Our country’s financial services sector has also been advantageous to people who have never taken a single step on our beautiful beaches, who might not be able to locate Cayman on a map, or who may even be vociferous critics of so-called “offshore tax havens.”
Frankly speaking, if professional detractors such as the Tax Justice Network or the Organisation for Economic Co-operation and Development got their way and pulled the plug on offshore financial centers such as ours, the gears of the global economy would grind to a halt.
That’s a message Cayman should be proactively projecting to the rest of the world.
The report from BVI Finance is important because it offers a counter-narrative to the tired old stories speculating about tax evasion, money laundering, terror financing, “unfair business practices” or “income inequality.”
Instead of shrinking from the negative rhetoric peddled by ignorant or agenda-driven foreign officials, advocacy groups and many media outlets, Cayman should take pride – publicly – in the vital role our country plays in international finance.
We are good at what we do. And what we do is good.
Jurisdictions such as Cayman (and BVI, and Bermuda) are the hubs around which the global economy rotates. That’s a story that needs telling.
Source: The Cayman Compass
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