To say that 2020 has been a year of cataclysmic change would be an under-statement. A global pandemic has changed the way the world functions, probably forever; there are warning signs pointing towards the possible break-up of the European Union; and there is investor concern over looming tax hikes, torpid economic growth, and cross-border trade complications.
Through it all, international financial centres have continued to operate, albeit on a somewhat altered basis, in the face of market disruption and ongoing regulatory and reputational attacks.
In this issue of the Economic Report, our cover story highlights the importance of IFCs’ contribution to the global economic system and examine how they continue to evolve through innovation. Unlike many larger onshore jurisdictions, IFCs do not stand still. They are constantly evolving, nimbly adapting to current investor demands, developing regulations and systems that can be shaped and moulded to market requirements. Our expert practitioners, commentators and academics discuss the past, present and future of IFCs, consider what their reputation is built on, which factors affect or influence the choice of IFC, and how they can ensure survival in the face of ongoing legislation and policy restrictions.
Our opening Comment looks at the implications of another important change that happened in 2020 – a new President of the United States in the form of Joe Biden, a vociferous proponent of tax increases which many fear will hamper economic growth for at least the next decade.
And you will not want to miss our interview with Pascal St Amans, director of the OECD’s Centre for Tax Policy and Administration in which Mark Pragnell challenges the organisation on issues such as financial transparency, its apparent inability to broker a global deal on the taxation of cross-border digital business, and how Pillar Two rules will protect sovereign nations and self-determining jurisdictions that legitimately choose to be tax neutral.
As well as commentary and opinion, we provide updates on global regulation and policy, including interviews with the IMF and FACTI, plus an examination of the fall out from the FinCEN leaks, and the growing controversy surrounding Unexplained Wealth Orders. Technical and practical articles cover blockchain, cryptocurrency, and trusts. Jurisdictions in focus include Hong Kong, the Cayman Islands, Guernsey, Bermuda, and the Bahamas. And we delve deeper into the challenges and opportunities of investing in Africa.
The year ahead will undoubtedly provide more challenges, particularly on matters such as cross-border trade, economic growth, tax, substance, and transparency. But demands for stability, expertise and flexibility will not wane and in an uncertain financial climate, there are good reasons why IFCs, with their ability to regenerate and rejuvenate, will not only continue to survive but thrive.