Offshore Financial Services Research Articles

Small can be smart—and smooth: the Cayman Islands' relations abroad and effects at home

The Cayman Islands were among the first micro-states to establish a thriving offshore financial services industry by exploiting their historical status as a tax-free jurisdiction. This was threatened when concern about the laundering of the proceeds of drug-trafficking induced the United States to challenge bank secrecy laws in the Caymans and other financial centres. This article demonstrates how decision-makers in the islands shrewdly secured the assistance of their protecting power, Britain, to gain leverage in negotiations with the United States, how they developed a negotiating brief and thereby created model arrangements that permit the exchange of certain financial information, while protecting the financial security of the legitimate patrons of their banks. © 1998 John Wiley & Sons, Ltd.

Global finance and the growth of offshore financial centers: The manx experience

The globalization of the world economy and the concomitant increasing complexity of the global financial system has resulted in a large number of relatively small places functioning as offshore financial centers (OFCs). OFCs provide an alternative avenue for capital to be invested (literally) in offshore markets. This paper argues that these small places have to strive hard to link in to the global economy in a reputable fashion and have to do so through the creation of spatially focused financial regulation and supervision. The importance of the constructs of trust, knowledge, reputation, and networks in the functioning of offshore financial services is explored. A conceptual framework is developed to illustrate how OFCs link in to the global economy along three dimensions: regulation, location, and function. A case study of the rise of the Isle of Man as an OFC provides empirical evidence regarding global-local linkages and the importance of creating an appropriately balanced regulatory regime.

Creolization redux : the plural society thesis and offshore financial services in the British Caribbean

Argues that the connection between political fragmentation and offshore financial services illustrate an increasingly common vision of the political and economic future among leaders of the British Caribbean who seek to carve out a place for their countries and territories in the new global economy. Their success is based on standing outside regional federations and providing services to parties wishing to conduct business between or around economic blocs.

The implications of the exclusive economic zone and eez management for bermuda, a small midocean island commonwealth territory

This article explores the implications of managing a 200‐nautical‐mile zone in excess of 100,000 square nautical miles for Bermuda, a British dependency that is one of 13 small, midocean island Commonwealth territories that possess similar 200‐nautical‐mile entitlements. With a population of just over 60,000 and a land area of only 20 square miles, Bermuda's 200‐mile exclusive fisheries zone (it has yet to claim an exclusive economic zone) is larger than that of countries such as Cuba, Ireland, and South Korea. Bermuda's local fishing industry is concentrated in the shallow waters of the Bermuda platform, essentially in internal or territorial waters. The country has a buoyant economy based on offshore financial services and tourism, but foreign deep‐sea fishing has never been systematically examined. For a combination of geophysical, commercial, and political reasons, it is argued, Bermuda has to date taken no coherent steps to manage or explore the potentialities of its 200‐mile zone.