CIG Explains Contribution of OFCs
Published 14th July 2008, 11:31am
Financial services centres such as the Cayman Islands play an important role in worldwide financial markets by providing economic efficiencies for the movement of capital and contributing to the development of innovative financial instruments that support the goals of liquidity and risk diversification.
These were just some of the facts included in the Cayman Islands Government’s written evidence submission to the UK Treasury Committee’s Inquiry into Offshore Financial Centres (OFCs), in the context of their impact on financial stability and transparency released to committee members on 1 July 2008.
The Cayman Islands submission noted that the term ‘offshore financial centre’ properly understood includes locations such as London, New York and Tokyo and outlined how the Cayman Islands and other centres have contributed to the health and growth of the global financial market, including adherence to– and in some cases exceeding – international standards.
The high degree of integration of OFCs into the global financial architecture was also outlined in the written evidence, citing, in the case of the Cayman Islands, the significant proportion of the world’s internationally active banks with licensees in Cayman. Cayman’s leadership position in sophisticated investment, capital markets and captive insurance products were also explained, indicating that they are developed for and used by global institutional clients. In addition, it was pointed out that integration with large OFCs produced a number of mutual benefits including employment, income generation and efficient global flows of investment.
Analyses and findings by the IMF, the U.S. Federal Reserve and the Financial Stability Forum were referenced to support the position that centres such as the Cayman Islands that comply with international standards promote rather than undermine financial stability and transparency. In addition, academic studies were referenced that showed, inter alia, that small OFCs score highly on measures of governance quality,, another indicator that such OFCs are thus likely to support financial stability and transparency and are not “rogue actors.”
The submission also provided Cayman-specific information regarding compliance with international regulatory and anti-money laundering as assessed by third-party evaluations. It summarised Cayman’s international cooperation efforts, implementation of the EU Savings Directive and participation in the OECD Global Forum on Taxation. Among the facts cited was that in relation to anti-money laundering/combating of terrorist financing standards, the Cayman Islands placed in the top five among those assessed to date using updated Financial Action Task Force methodology, underscoring Cayman’s commitment to doing its part in the global fight against financial crime.
For more information, please contact the Financial Services Secretariat at (345) 945-5819 or via email at email@example.com.