ECONOMY OF BERMUDA

Tags

Bermudian $50 Banknote

Economy of Bermuda
Since switching from the Bermudian pound in 1970, Bermuda's currency has been the Bermudian dollar, which is pegged to the US$. US notes and coins are used interchangeably with Bermudian notes and coins within the islands for most practical purposes; however, banks levy a small exchange rate for the purchase of US dollars with Bermudian dollars. Bermudian notes carry the image of HM Queen Elizabeth II. The Bermuda Monetary Authority is the issuing authority for all banknotes and coins, as well as being responsible for the regulation of financial institutions. There is a permanent exhibition of Bermuda notes and coins at the Royal Naval Dockyard Museum.

Bermuda's per capita income is approximately 20% higher than that of the United States; according to the Bermuda Government's Economic Statistics Division (citation needed), Bermuda's GDP was $5.85 billion in 2007, or $91,477 per-capita, giving Bermuda the highest GDP per capita in the world. According to Bermuda Stock Exchange in 2009 Bermuda had a high per capita income of over $97,000 yet the median per capita income is much lower as these statistics represent a small number of high earners and its "public debt ratios still compare quite favourably with those of €˜AA' peers"

The affordability of housing has become a prominent issue over the past few years. The CIA World Factbook lists the average cost of a house in June 2003 as $976,000, while real estate agencies have claimed that this figure had risen to $1.6 million by 2006 but has significantly been devalued since the financial crisis as large percentage of foreigners have left Bermuda for Switzerland as well as other tax havens , and to $1.845 million by early 2007, though such high figures have been disputed.

Bermuda is an offshore financial centre, which results from its low direct taxation on personal or corporate income. The local tax system is based upon import duties, payroll taxes and consumption taxes. The legal system is derived from that of the United Kingdom, with recourse to English courts of final appeal. However, foreign private individuals cannot easily open bank accounts or subscribe to mobile phone or internet service.

As the offshore domicile of many foreign companies, Bermuda has a highly developed international business economy; it is a financial exporter of financial services, primarily insurance, reinsurance, investment funds and special purpose vehicles (SPV). Finance and international business now constitute the largest sector of Bermuda's economy. However in September 2009, it was reported that a growing number of companies were moving from Bermuda to Ireland as part of a search for "a more stable environment".

Large numbers of leading international insurance companies are based in Bermuda, making the territory one of the world's largest reinsurance centres. Those internationally owned and operated businesses that are physically based in Bermuda—of which there are around four hundred—are represented by the Association of Bermuda International Companies (ABIC). In total, over 1,500 exempted or international companies are currently registered with the Registrar of Companies in Bermuda.

Thanks to its favourable tax regime and a highly reactive regulatory framework Bermuda is the domicile of choice for the implementation of insurance-related innovative solutions also known as Alternative Risk Transfer (ART). ART includes captive insurances, Finite Risk insurance and insurance securitisation such as Cat bonds.

The Bermuda Stock Exchange (BSX), established in 1971, is now the world's largest fully electronic offshore securities market, with a current market capitalisation (excluding mutual funds) in excess of US$330 billion. There are four hundred securities listed on the stock exchange, of which almost three hundred are offshore funds and alternative investment structures attracted by Bermuda's regulatory environment. The Exchange specialises in listing and trading of capital market instruments such as equities, debt issues, funds (including hedge fund structures) and depository receipt programmes.

The BSX is a full member of the World Federation of Exchanges and is located in an OECD member nation. It also has Approved Stock Exchange status under Australia's Foreign Investment Fund (FIF) taxation rules and Designated Investment Exchange status by the UK's Financial Services Authority.

Tourism is Bermuda's second largest industry, with the island attracting over one-half million visitors annually, of whom more than 80% are from the United States. Other significant sources of visitors are from Canada and the United Kingdom. Tourists arrive either by cruise ship or by air at Bermuda International Airport, the only airport on the island.