Although China and Japan remain a chief exporter to the United States of America, Caribbean banking centers made up of Bahamas, Bermuda, the Cayman Islands, Netherlands Antilles, Panama and the British Virgin Island account for $148.3 billion (1 percent) of U.S. government debt.  According to the Major Foreign Holder of Treasury Securities in 2009, these banking centers were the 3rd largest holder of US Treasuries in the world.  But who is the biggest contributor to Caribbean banking centers?

Nearly one year ago, President of Panama, Ricardo Martinelli met with Dimitris Christofias, President of Cyprus (photo above) to discuss various issues related to economic empowerment.  These issues ranged from economic development, reuniting the two countries, implementing an international law and the UN Resolutions on Cyprus.  Panama and Cyprus are both countries which rely heavily on maritime logistics, banking centers and tourism.

As leaders of the Caribbean Community meet with other nations to discuss plans for economic empowerment, many are calling their banking centers a tax haven.

According to a BBC interview on May 12, 2010, journalist David Cay Johnston spoke about the Caribbean Banking Centers in relation to the Obama administration’s avowed crack down on “tax havens”.  He proposed the following noteworthy remarks:

• “The US government should invade Cayman Islands [a British territory], seize all of their records, and prosecute every single tax cheat!”Invade? Is he serious? Or is he stupid? Or is he ignorant? (Or all of the above?)

• “What benefit do the taxpayers of the US, UK, anywhere in the world, get, by having these banking centers?”Benefit, like having their national debts purchased by them so that their governments can keep on spending and wasting?

Some people have suspected that the Caribbean banking centers act as conduit to the central banks, including the US Federal Reserve, Bank of England, and Bank of Japan, and that they have been purchasing the US Treasuries and sovereign debts on behalf of these central banks: covert monetization of the debts.  So are central banks engaged in money laundering?  That question can be answered by asking how powerful the central banks in the Caribbean are. The fact is that the East Caribbean dollar remains the most widespread currency of central banks in the Caribbean followed by the United States dollar and the euro.  Yes, the currency of Bahamas, British Virgin Islands, Cayman Islands, Bermuda and many more Caribbean islands are controlled by central banks.

What is interesting is the relation between central banks and Caribbean currency.  Fact is, the East Caribbean dollar remains the most widespread currency of central banks in the Caribbean followed by the United States dollar and the euro.  Yes, the currency of Bahamas, British Virgin Islands, Cayman Islands, Bermuda and many more Caribbean islands are controlled by central banks.

There are some benefits worth mentioning to offshore banking that impact Caribbean markets.  The incentives for banking offshore have shaped the future of the Caribbean economy which has resulted in greater domestic economic benefits.

Now, who is the biggest debt holder to the US? Before answering that question let’s consider whether or not the US government can slow down its spending.  The US spends unprecedented amounts of money to fix its economy. Altogether, America owes foreigners about $4.5 trillion in debt but America owes America $9.8 trillion. That’s right the biggest holder of US government debt is actually within the United States. The Federal Reserve System of banks and other US intergovernmental holdings account for a stunning $5.351 trillion in US Treasury debt and counting.

 

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