Saturday, March 20, 2010

GFI's $10 trillion - and there's more

Further to yesterday's blog on the $10 trillion offshore figure, we'd like to stress that Global Financial Integrity's estimate, which chimes nicely (albeit using different data sets) with TJN's The Price of Offshore is as they say, just part of the equation. They cite two key reasons why this figure is likely to be too small:

"First, there is no reporting of business managed off the balance sheet. As the International Monetary Fund notes in the Offshore Financial Centers IMF Background Paper, “anecdotal evidence suggests [off-balance sheet activity] can be several times higher than on-balance sheet activity” (IMF).

Second, BIS data do not include information on assets held by mutual funds or private trusts and companies, the beneficial owners of which do not need to be reported."

Read more in the report. The growth rate is striking, as the graph shows:

"Clearly, the growth rate of offshore deposit holdings has outpaced the rise of world wealth."

Note that our Price of Offshore study relates solely to financial deposits, which we estimated at around $9 trillion, but we also added a further $2 trillion of non-financial assets, including works of art, real estate, private jets, yachts, race horses, etc, all of which would incur taxes (estate, inheritance, wealth, capital gains, etc) if taxable onshore. The new GFI figures show sustained growth since 2005 and are consistent with our data.


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