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Small states and global finance

Explore the nuances of global finance, Bretton Woods institutions, small states' economic openness, tax havens vs. offshore financial centers, and case studies such as Mauritius and Cayman Islands. Delve into the complexities of foreign assets and connections in the world of finance.

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Small states and global finance

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  1. Small states and global finance Dr William Vlcek Lecturer in International Relations School of International Relations University of St Andrews, Scotland

  2. Overview • What is meant by ‘global finance’? • The size of capital flows • The Brettons Woods institutions and other international organisations • Small states and open economies • Mauritius and the Cayman Islands • Tax haven or OFC? • The experience of Iceland with global finance

  3. Foreign assets on deposit: developed countries and offshore financial centres Source: Bank for International Settlements (Dec 2013) BIS Quarterly Review (Basel: Bank for International Settlements), Table 6a.

  4. BIS offshore financial centres • Aruba • Bahamas • Bahrain • Barbados • Bermuda • Cayman Islands • Curacao • Gibraltar • Guernsey • Hong Kong SAR • Isle of Man • Jersey • Lebanon • Macao SAR • Mauritius • Netherlands Antilles • Panama • Samoa • Singapore • Sint Maarten • Vanuatu • West Indies UK (composed of Anguilla, Antigua and Barbuda, British Virgin Islands, Montserrat, and St Kitts and Nevis)

  5. Connecting Greek finance to the world Source: International Monetary Fund (Oct 2010) Understanding Financial Interconnectedness, p. 19.

  6. Bretton Woods institutions • International Bank for Reconstruction and Development (IBRD), foundation for the World Bank Group • International Bank for Reconstruction and Development (IBRD) • International Development Association (IDA) • International Finance Corporation (IFC) • Multilateral Investment Guarantee Agency • International Centre for the Settlement of Investment Disputes • International Monetary Fund (IMF)

  7. Bank for International Settlements • The ‘Central Bank for Central Banks’ located in Basel, Switzerland • Basel Committee on Banking Supervision • Basel Capital Accord, 1987 • Basel II, 2004 • Basel III, 2011 (capital)/2013 (liquidity)

  8. International regulatory groups • International Organisation of Securities Commissions (IOSCO) • International Association of Insurance Supervisors (IAIS) • International Accounting Standards Board (IASB) • Financial Action Task Force (FATF) • SWIFT – Society for Worldwide Interbank Financial Telecommunication

  9. The ‘open’ economy • A country that is open to trade other countries • A small open economy is a ‘price-taker’

  10. Mauritius

  11. The Cayman Islands and the Caribbean

  12. ‘tax haven’ versus ‘offshore financial centre’ • Tax haven – a jurisdiction that imposes little or no tax on mobile capital • Offshore financial centre – a jurisdiction that provides a legal and financial regime specifically targeted at foreign mobile capital (and taxation may be one part of that regime)

  13. Icesave • An online savings bank, part of the Icelandic bank, Landsbanki

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  15. Taxing the multinational corporation • Home jurisdiction • Host jurisdiction • Intermediate corporate structures in the Caribbean

  16. Baidu, Inc. corporate structure Baidu, Inc.(Cayman Islands) B.D. Mobile Telecommunications Limited(Cayman Islands) 16 Baidu Holdings Limited.(British Virgin Islands) (majority-owned) Qunar Cayman Islands Limited (Cayman Islands) Baidu Netcom ScienceTechnology Co., Ltd.(affiliate, PRC) Qiyi.com, Inc.(Cayman Islands) (Wholly-owned) Beijing PerusalTechnology Co., Ltd. (affiliate, PRC) Baidu Online Network Technology (Beijing) Co., LTD.(PRC) Baidu Japan Inc.(Japan) Baidu (Hong Kong) Ltd.(Hong Kong SAR) Beijing BaiduPay Scienceand Technology Co., Ltd.(affiliate, PRC) Baidu (China) Co., Ltd.(PRC) Baidu.com TimesTechnology (Beijing) Co., Ltd.(PRC) Baidu HR Consulting (Shanghai) Co., Ltd. (affiliate, PRC) Baidu Cloud Computing Technology (Beijing) Co., Ltd.(PRC) Baidu Cloud Computing Technology (Shanxi) Co., Ltd.(PRC) Source: Baidu.com Inc, 2011 Annual Report and SEC Form 20-F for 2012

  17. Offshore data leak • Hard drive with details on some 120,000 companies registered in the British Virgin Islands delivered anonymously to the International Consortium of Investigative Journalists (ICIJ) • http://www.icij.org/offshore/secret-files-expose-offshores-global-impact

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