Competitive or Coercive? The Experience of Caribbean Offshore Financial Centres with Global Governance

Abstract

This article examines the readiness to be internationally competitive on the part of small vulnerable economies through a consideration of Caribbean offshore financial centres. More specifically, it analyses the space for decision making to enhance the competitiveness of financial service provision permitted by the increased institutionalization of global financial governance. The promulgation of international standards and best practices for the operation of financial services has moved beyond the concerns with global financial stability and supervision (a predominant concern in the late 1990s) to focus on measures against terrorist financing today as states seek to achieve a measure of security through financial surveillance and discipline. Collectively, increased governance produces increased costs for national financial supervisory authorities, which over-extends in particular the capacity and capability of small jurisdictions. To combine these regimes of governance with initiatives to establish an international 'level playing field' in financial services produces a competitive environment that privileges the larger developed economies. From this perspective, it is less a matter of competition and more a case of coercion, which then lessens the opportunity to structure an internationally competitive small economy using offshore financial services as one avenue towards economic development. At the same time, the nature of the states system continues to provide a space in which offshore financial centres may compete.

Secessionism in Nevis: Why Have Tensions Eased?

“…This tension sharpened during the COVID-19 pandemic. Growth in the financial services sector slowed in the early 2000s with the rise of the global Financial Action Task Force (FATF) and the panoply of Anti-Money Laundering/Counter-Terrorism Financing and Proliferation (AML/CFT) regulations that have been imposed and enforced by OECD member states and the international financial institutions (Marshall, 2003;Vlcek, 2008;Zagaris, 2021). However, St Kitts and Nevis also has had, since 1984, a Citizenship by Investment programme (CBI) which is a sub-sector of the global financial services industry.…”