I've written recently about the many reasons why Cayman is a
successful international financial centre (IFC) –
specifically ten key ingredients, all of which, in my opinion,
Cayman delivers on and which no other IFC in the region can
claim. To substantiate my opinion the Cayman Islands just
topped all of its competitors in the region in the latest
Global Financial Centres Index (GFCI) – Global
Offshore Financial Centres category.
We are well known among our peers for offering superior service,
and we have a strong diversity within our product, excelling in
insurance, banking, professional services, and investment
management – all working within a well-regulated
jurisdiction. It therefore comes as no surprise the Cayman
Islands again ranks so highly in the GFCI.
Here are the ten elements I believe help Cayman keep its
1) Legal & Judicial Framework
The use of English common law and statute and English-style
courts is the preferred standard in the vast majority of
international transactions. Many successful FSCs are current or
former territories of the UK.
2) Political Stability
Countries that demonstrate a long history of commitment to the
democratic institutions and little social pressure to change the
political landscape are better positioned in this regard and Cayman
is without a doubt ahead of its key competitors in this area.
3) Human Capital
While the desire of every politician is and should be to ensure
citizens have access to the best jobs available, this must be
balanced with the reality that the international clientele that is
serviced will necessarily look for the best service providers in
the market place – wherever they may be located.
Cayman has historically maintained a more flexible immigration
policy than its peers, probably because population growth is less
problematic for Cayman than for many other jurisdictions.
4) Availability of Land
without land the social cost of growth is high, and without
growth the countries find themselves faced with typical fiscal and
economic problems. Cayman is uniquely positioned in this regard
against other territories in the region.
5) Critical Mass
Without the critical mass to support the regulatory framework
needed for compliance, IFCs will find themselves unable to offer
services or will have to impose taxes, fees, and duties that
effectively price them out of market. Cayman has achieved
critical mass .
6) Credit Quality
While IFCs usually act as a conduit of funds between the
investors and the destination of the investments, the credit rating
of the IFC itself can add a layer of risk, and as such, its fiscal
status is critical. Cayman has maintained its credit rating at the
same level as before the 2008 crisis – that's something
very few countries can claim.
7) Government Revenue Collection
Regularly IFCs are wrongly considered "tax free" or a
"tax haven". I am not aware of any such
place. All Governments need revenue to pay for
services. Cayman has concentrated its taxes on consumption,
which is one of the less-distortive taxes and the least damaging to
Location is the first obvious measure of accessibility, which
can easily explain the correlation between IFCs in the Caribbean
and Americas business. The direct, short flights from major
hubs in the US to Cayman are clearly a positive factor.
However, accessibility should also include language, the ability to
communicate effectively with the end users, and culture.
Financial services are a highly-competitive sector, and IFCs
need to remain agile and responsive to customer needs in terms of
products, legislation, and regulation. Financial services
contribute over half of Cayman's GDP and government revenue,
ensuring it receives the attention needed for its continued
It is crucial the jurisdiction's regulator sees the industry
it regulates as customers and to understand a vital part of its
role is advancing the overall wealth of the IFC. Historically
the Cayman Islands Monetary Authority, has successfully navigated
the changing landscape while maintaining this equilibrium.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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