The Cayman Islands is a striking symbol of success when it comes to the offshore financial services industry and is undoubtedly a vital cog in the machinery of the global financial markets, offering an extremely important and efficient service for investors the world over.
But it is also very important to remember that our financial services industry benefits everyone, putting money into the pockets of the average working people living onshore in places such as the United States, whose pension plans are themselves investors of funds domiciled in the Cayman Islands.
The average person onshore whose pension plan has invested in a Cayman Islands domiciled investment fund most likely has no idea that their money has been invested through a Cayman fund. All they want to know is that they will have enough money when they retire to live happily into old age. Offshore financial centers such as Cayman help this happen.
The industry also benefits the ordinary men and women who help to run this vital industry, which is the biggest industry in the Cayman Islands, making up more than half of the islands’ GDP (according to Cayman Finance). At first glance, it may be concluded that the financial services industry benefits only the very wealthy, those with millions to invest, but that makes no sense. The Cayman Islands is full of personnel who actively work in the industry, such as accountants, lawyers, bankers and administrative staff, all Cayman Islands residents who live here and call Cayman home. They in turn invariably have families living with them who all spend money in the jurisdiction for everything from construction to groceries and so on, and of course, real estate, as they settle here and purchase homes. This funneling of salaries back into the local economy benefits everyone who lives and works here.
It is therefore important to note that offshore financial services centers such as ours perform multiple and equally important roles in the local and global economies. If the Cayman Islands did not have such a robust and successful financial services industry, there would be a severe impact on the wealthy investors and the ordinary people who use the system and the ordinary people who work within it. It would mean that residents of these islands would miss out on a great deal of opportunities as a result and in particular, the opportunity to buy homes. A flourishing real estate industry needs a successful economy in which to operate.
When considering the benefits of the financial services industry, it is therefore very important to consider the whole picture. An economy that relies upon a consumption-based environment needs lots of people spending lots of money. High spending means a greater volume of fees paid to the government, in the form of stamp duty on property and customs and import duties on goods brought into the country, as an example, which in turn helps government to build an effective infrastructure, which benefits the entire community in the long run.
Brexit and Cayman
The question of the likely impact of Britain’s impending withdrawal from the European Union (Brexit) is on a lot of people’s minds, not least of all those operating in the real estate industry in the Cayman Islands. The truth is that no one truly knows the impact that Brexit will eventually have as it is early days yet, but it is useful to consider the possible positive outcomes for these islands. When Britain is eventually separated from the EU, it will no longer need to follow the EU’s lead when it comes to matters of financial services, which will then in turn impact Cayman’s financial services industry, meaning that, as a British Overseas Territory, Cayman is required to abide by the U.K.’s decisions in such matters. The U.K. will now be free from the EU’s control, so Cayman will not be automatically forced into EU policies without any control. Giving back control to the industry itself must surely be a good thing for this jurisdiction.
Secondly, I believe that Britain leaving the EU will undoubtedly have the potential to weaken the EU as a whole. I believe that offshore financial centers such as ours can benefit from this because investors will be more likely to seek the Cayman Islands as a good opportunity, a location of strength and stability in an era of instability (a situation universally loathed by investors). This would be excellent news for Cayman because as the economy grows and more people seek to work and reside here and buy property here, the more successful this jurisdiction becomes.
I believe that Britain, and in turn, the Cayman Islands, has its fair share of challenges ahead as it seeks to carve out a new path for itself free of the EU, but as far as our own jurisdiction is concerned, I see a positive future for us. And, as already discussed in this article, when offshore jurisdictions thrive, everybody wins.