The BVI Is Shaping The Future – By Enabling Innovation And Progress

Finding solutions for today’s issues and rising to meet the challenges of tomorrow will also be reliant on these core principles. From the urgent demands of climate change to the huge societal and economic impact of digital innovation, the global financial community has a responsibility to react accordingly, ensuring that structures remain fit for purpose and that communities around the world have the resources to develop. The BVI remains perfectly positioned to take on these challenges, to harness the opportunities that lay ahead and to mitigate and overcome the challenges posed.

By creating pathways for international investment to flow to where it is needed the most, the BVI is creating the right environment for global progress – from supporting new technologies, enabling sustainable finance to make a real impact, and enabling emerging economies to capitalise on new opportunities.   

The Digital Evolution Of Finance

Pivotal to enabling progress is the BVI’s legislative landscape and its exceptional ability to adapt to the changing circumstances. 

The BVI’s many associations – from the Investment Fund Association, to Restructuring and Insolvency Association – work hand in hand with BVI Finance, the BVI Government, and the Financial Services Commission (FSC) to ensure that the BVI is not only compliant with all international standards, but that the legislative landscape allows the BVI to remain forward-looking and competitive.

A prime example of this is the approach to FinTech and cryptocurrencies with the largest and most prolific of the BVI Finance Working Groups being its Digital Asset Working Group – with participants from both on-island and more broadly from across the world.  This brings with it an unparalleled level of knowledge and experience.

In 2020, the BVI introduced the Regulatory Sandbox for FinTech Innovation, creating an ecosystem where tech start-ups and traditional financial institutions can create new solutions for financial services without restrictive regulatory burdens. The purpose of the scheme is to attract people who have unique ideas in the FinTech space, and the calibre of applications is extremely high.

The FinTech ecosystem is increasingly important to the offerings of the jurisdiction, which is why BVI have also launched a FinTech training programme, in collaboration with the National University of Singapore School of Computing. With support and allocated resources from the Minister of Education, the programme aims to prepare rising BVI professionals for the fast-shifting digital landscape, equipping them with the right tools needed to grow in the sector and create a pioneering ecosystem in the BVI.

Alongside this progress, the BVI is also making impressive inroads in the cryptocurrency and digital asset space. Back in 2015 when most jurisdictions were not accepting digital asset funds, the BVI Investment Fund Association was working closely with the FSC to make the case for this new asset class, extensively reviewing why they should in fact be the first to embrace this. This bold approach paid off, with the BVI securing funds from the US West Coast early on which have grown immensely. The BVI now attracts credible players from the world over and is becoming a top destination for digital asset funds.

Cryptocurrency and digital assets sit in a complex legislative landscape, as regulators and governments across the world attempt to keep up with the pace of innovation.  It is highly expected that new legislation from the EU and other jurisdictions will be implemented this year and the BVI will be at the forefront of these, adapting seamlessly to new regulations and looking for further ways to progress in the sector.

A Sustainable Future

Alongside the impact of digital innovation, one of the most pressing issues for the international financial sector is climate change and the rise of ESG investment, and International Financial Centres have an important role to play in shifting to a more sustainable global economy.

Historically, sustainable investing was simply about ‘negative screening’ for example, the exclusion of certain types of companies from investment. But this is no longer the case as it is clear a more direct approach is now needed.

The BVI is identifying opportunities in this space and harnessing its structures and community to make a significant impact in countries around the world.

According to the Global Sustainable Investment Alliance, global sustainable investment is now over US$35 trillion, accounting for over a third of global assets. With this in mind, it is clear the potential for IFCs to make a meaningful difference is huge. A rapidly growing share of these opportunities are found in the emerging markets sector and in countries that are themselves already feeling the impact of climate change more acutely, requiring urgent action.

BVI business companies hold approximately US$1.5 trillion of assets. Furthermore, investment mediated by international business and finance centres supports around 2.2 million jobs around the world and contributes over US$15 billion each year to government coffers. The capital from BVI vehicles has already facilitated investment in factories, hospitals, railways, broadband, and machinery in emerging markets, which would not have found adequate funding otherwise. These structures must now be employed to help communities tackle the impact of climate change and find solutions, such as investment into green energy and agriculture.  

Additionally, based on independent research produced by ODI in 2019[i], IFCs such as the BVI were estimated to galvanise additional finance to developing countries of US$1.6 trillion between 2007 and 2014, boosting their GDP by US$400 billion and tax revenues by US$100 billion during that period.

BVI can provide the critical framework to facilitate the efficient flow of capital that the global economy needs, and this role is more vital now than ever if the international community is to reach its net zero targets.   

A Global Vision

The BVI views itself as part of a global village – a connector for investors, businesses and entrepreneurs who can lead on progress in growth, jobs, and prosperity.

In recent years, the focus on emerging markets in this global community has been crucial. From Asia to Africa and Latin America, the BVI is fully committed to creating pathways for investment and resources to flow and support growing economies.

In Asia, the long-standing collaboration is evident, with approximately 75 per cent of companies listed in Hang Seng Index having BVI companies incorporated into their structures (Source: Capital Economics).  However, as Asia’s GDP is expected to expand in nominal terms from US$33 trillion in 2021 to US$39 trillion in 2023, the opportunity is continuously evolving.

The relationship with China is long-standing and remains a core focus for the BVI but across the continent, markets such as Singapore, India and Indonesia are demonstrating impressive growth, in part due to the growing boom of financial technology and digital infrastructure for their vast populations. This is creating opportunities for global investment to have a long-term impact and the BVI is well positioned to strengthen the relationships across the region and contribute to this economic growth.

The BVI is also committed to supporting digital innovation in these markets. The recent recognition by the BVI Financial Services Commission of the Fusang Exchange, Asia’s fully regulated end-to-end digital security exchange, demonstrates the commitment to digital assets. 

Looking across to Africa, it is evident many countries are now emerging as the next frontier of global growth. A combination of important factors – a young population, rising focus on digital innovation, and the restart of the Africa Continent Free Trade Agreements (AfCFTA) – are creating a fertile soil for progress.

The BVI can make a valuable contribution to this. The BVI specialises in creating neutral platforms to facilitate cross-border trade, investment, and finance and by building efficient vehicles for joint ventures, the BVI brings contributors together to participate and invest in economic opportunities.

The BVI is unique for its fully global view. For example, around 20 per cent of BVI Business Companies are based in Latin America and Caribbean, and this relationship is continuing to grow as estate planning products and world-class trust legislation increase in popularity in the region.

From Africa to Asia and the Middle East to Latin America, the commitment to global growth remains unwavering.   

Conclusion

The BVI’s ability to stay resilient and agile in fast-shifting circumstances is based on its forward-thinking legislative landscape, willingness to be bold in embracing new opportunities and an understanding of the interconnected nature of the global community.

The last few years have shown that today’s challenges are truly global ones – from climate change to public health – and that international collaboration will be essential for finding solutions.

The BVI and IFCs in general have an important responsibility to harness the lessons we have learnt over the past several decades to spearhead progress in finance and digital technologies, and to provide pathways for investment to flow into development and emerging markets to empower communities and foster progress.

Footnotes:

[i] https://odi.org/en/publications/international-financial-centres-and-development-finance/

Elise Donovan
CEO