GFCI 16 methodology questioned by Cayman Finance
(CNS Business): Cayman Finance has criticised the overall methodology of the sixteenth Global Financial Centres Index (GFCI 16), which found that the Cayman Islands dropped 11 ranks among financial centres around the world since GFCI 15, and now sits at #54. But the CEO of Cayman’s financial services umbrella organization said that some of the results of the report cast doubt over the usefulness of the index.
“While we welcome the fact that Cayman is ranked in the top three of offshore centres ahead of significant competitors like Bermuda, Jersey and Guernsey, the dramatic changes in ranking that have been displayed in this current index and some particular results make us doubt of the usefulness of this index,†stated Cayman Finance CEO Gonzalo Jalles. “The changes in the rankings of offshore centres are difficult to reconcile with recent industry developments.â€
He continued, “The index is a combination of a survey and a number of discretionary chosen indexes without full transparency on how each country calculation is performed. This makes us doubt the validity of the overall results. Combining a survey of qualitative measure with quantitative indexes is particularly difficult, if not impossible, as highlighted by the recent study we commissioned – An analysis of the efficacy of Tax Justice Network’s methodology in constructing a secrecy index, by Aaron D. Smallwood, PhD, Associate Professor of Economics, University of Texas-Arlington, released earlier this year.â€
In addition, the results are made even more challenging because some of the recognized countries are not ranked in some of the indexes, he said.
According to the findings of the report published twice yearly by Z/Yen Group, the Cayman Islands has fared extremely well when it comes to recognition by clients.
Cayman received a high global average assessment at 635, beating all its other offshore financial centre competitors in this latest round of rankings in this particular figure, which is up on the previous Index. Jalles said this was extremely good news for the jurisdiction:
“The assessment based upon responses, which is equally applied to all jurisdictions represented in the survey, is, in my opinion, the most critical piece of data that the entire index has produced,†he confirmed. “Under that assessment the Cayman Islands ranks nine positions higher than the previous survey, and ahead of all the countries listed as offshore centres. This is significant because it reflects the fact that our customers believe Cayman is the offshore centre of choice for their business.â€
“Overall we welcome the feedback from our customers as reflected in the survey, but we put very little confidence in the rest of the analysis despite our positive result as we do on any index that lacks transparency in regards to the methodology used for its construction,†Jalles stated.
Related article:Â Cayman loses ground in global index
Category: Finance, Financial Services
A case of picking and choosing, as well as shooting the messenger? The methodology for the index is clear and posted openly and available to all – http://www.globalfinancialcentres.net & http://www.longfinance.net/programmes/financial-centre-futures/fcf-gfci/methodology.html. The methodology is accepted widely by many centres who have commissioned much deeper research and taken the time to see its richness. The fact that the critic doesn’t understand the methodology is regrettable, and I would encourage him to contact us at Z/Yen directly before writing in ignorance. In fact, he undermines his argument by claiming falsely that the known problems with the Tax Justice Network index have something to do with the Global Financial Centres Index, as well as then hypocritically using our openness in providing the raw information to claim we’re obfuscating. A curious case of picking and choosing indeed.