IFCs contribute hugely to the global economy and societies worldwide. They help create investment and jobs in onshore jurisdictions. They boost the returns to pensions and reduce cost of insurance policies. They help combat poverty by providing investment to developing countries. And they help onshore financial centres, especially in economies to which they’re closely-linked, like the UK and other European countries. Click on the links below to find out more.
Creating investment and jobs – IFCs facilitate cross-border investment at low cost. This increases the incentive to invest across borders and creates investment opportunities that would not otherwise exist. This leads to greater investment and the creation of millions of jobs in the UK and around the world.
Fighting poverty – The biggest barrier to investment in emerging markets is the lack of legal institutions to protect investments. Investing through IFCs provides investors with those legal institutions. That’s why BVI and Cayman are the largest sources of capital in-flow into China: lifting millions out of poverty.
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Reducing risk – By facilitating the low-cost diversification of investments across multiple jurisdictions, IFCs reduce investment risk. This increases risk-adjusted returns across all products. It also makes IFCs especially suited to facilitate reinsurance.
Providing for pensioners – By increasing returns to investments, IFCs increase the savings potential for pensioners and other long-term savers. Furthermore, as they’re generally tax-free already, they are clearly using IFCs for reasons other than tax purposes: demonstrating the role played by IFCs.
Supporting onshore financial centres – IFCs support onshore financial centres, such as London, by offering tax-neutral platforms for investments to be domiciled while managed onshore. They also provide additional liquidity, which was worth up to £250 billion to UK-based banks at the height of the credit crunch.
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