The positive role that offshore financial centres play in supporting growth around the world is highlighted in a new report, International Finance Centers and the World Economy, published today. The report was commissioned by the Society of Trust and Estate Practitioners (STEP) from prominent US economist Professor James R Hines Jr of the University of Michigan and NBER.
Ahead of this weekend’s G20 Finance Ministers’ meeting the report gives a strong indication of the key role well regulated offshore centres now play in the global economy by providing capital to support business activity in neighbouring economies.
The report finds strong evidence from a range of sources that offshore centres play a vital role in the international financial system, improving the availability of credit and encouraging competition in domestic banking systems. The result is a boost in investment in the major economies which ultimately supports job creation and growth.
Professor Hines commented that: “The evidence indicates that offshore centres contribute to financial development and stability in neighbouring countries, encouraging investment, employment, and other aspects of business development. They have salutary effects on tax competition, promote good government, and enhance economic growth elsewhere in the world.”
Chief Executive of STEP Worldwide David Harvey welcomed the report saying: “This report provides further robust evidence of the positive role offshore centres play in the world economy. Last week the Foot Review of British offshore financial centres found that they provided net financing to the British banking system of $332.5 billion in the second quarter of 2009. Professor Hines’ report demonstrates that IFCs play a similar role around the world, lowering the cost of capital to developed and developing economies alike.”
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