Despite recent criticisms against the world’s leading Offshore Financial Centers (OFCs), experts are still positive on the essential roles of such institutions to promote growth not only in the international industries of trade and finance but on the global economy as a whole.
What are the known roles of OFCs in the modern economy that make them inevitable factors to a healthy global economy?
First of all, offshore financial centers such as the Bermuda, Cayman Islands, and the Bahamas are ideal headquarters for international finance and trade because of their efficient tax policies catered mostly to foreign investors, private and sovereign. More importantly, they provide a safe and secure environment for risk management and financial planning for high net-worth individuals and mega-corporations – the biggest participants in the global trade.
Global transactions are widely complex and current international tax treaties are incapable of managing such complexities without imposing a bigger financial toll on big investors and other participating economies. For this reason alone, investment structures offered by OFCs are the most practical options.
OFCs give companies and other investment funds to manage, process, and operate transactions on a global scale without the worries of abiding by several and often paralyzing rules. Because of this, both established and emerging markets have reaped the most rewards, thanks to the leading offshore financial centers that have continued to support the global economy by providing a simpler and more comprehensive approach to global transactions.
Lastly, OFCs have policies that enable an effective management of pooled funds, providing a more open access to a long list of international investments, and thus, a more diversified portfolio for small and big investors.